IN  THE  MATTES  OF  THE  POSTAL-TELEGRAPH  BILL. 


4  Washington,  D.  C.,  April  22,  1872. 
Argument  of  Mr.  Gardiner  G.  Hubbard,  before  the  House  Committee  on 
Appropriations,  in  favor  of  the  Senate  bill  to  reduce  the  rates  of  corres¬ 
pondence  by  telegraph,  and.  to  connect  the  telegraph  with  the  postal 
service ,  reported  by  Mr.  Ramsey  from  the  Committee  on  Post-Offices 
and  Post-Roads. 

Mr.  Hubbard  said : 

It  is  three  years  since  I  first  had  the  pleasure  of  appearing  be¬ 
fore  a  committee  of  the  House  in  relation  to  the  postal  telegraph. 
Two  years  ago  I  appeared  before  a  select  committee  of  the  House 
on  the  subject.  The  bill  which  was  then  under  discussion,  and 
of  which  the  present  is  an  amendment,  proposed  a  great  reduction 
of  the  telegraph  rates.  It  was  so  large  that  some  gentlemen 
thought  that  it  must  result  in  a  loss.  I  will,  therefore,  state  some  of 
the  reasons  then  advanced  why  the  rates  could  be  so  largely  re¬ 
duced.  I  stated  that  certain  improvements  had  been  made,  which,  if 
adopted  in  the  telegraph  business,  would  greatly  reduce  the  expenses. 
One  of  those  was  “  the  double  transmitter,”  by  which  messages  are 
transmitted  both  ways  at  the  same  time  on  a  single  wire.  That  proposi¬ 
tion  was  then  considered  by  the  president  of  the  Western  Union 
Telegraph  Company  as  one  of  the  fallacies  of  Mr.  Hubbard,  showing 
that  "he  was  a  man  of  theories,  without  any  practical  knowledge  of  the 
business.  Mr.  Orton  asked,  “How  can  it  be  done1?”  To  which  I  re¬ 
plied,  “  How  can  the  first  message  be  sent  over  the  wires  !”  which  he 
confessed  his  inability  to  answer. 

On  the  first  day  of  last  November  I  weut  into  the  office  of  the  elec¬ 
trician  of  the  telegraphs  of  Great  Britain,  and  almost  the  first  thing 
said  to  me  was,  “  We  have  to-day  received  a  letter  from  Mr.  Prescott, 
the  electrician  of  the  Western  Union  Telegraph  Company,  in  which  he 
says,  4  We  have  just  introduced  the  double  transmitter  on^the  lines  be¬ 
tween  New  York  and  Albany  with  great  success.’”  The  first  time  I 
met  Mr.  Orton,  after  my  return,  he  said,  44  We  have  just  introduced  the 
double  transmitter  on  the  lines  between  New  York  and  Buffalo,  but  are 
unable  to  work  for  a  greater  distance.”  Four  weeks  ago  yesterday  I 
met  Mr.  Prescott  at  the  Arlington  House,  and  he  said,  44  Mr.  Hubbard, 
you  have  taken  an  interest  in  the  double  transmitter,  and  will  be  glad 
to  learn  that  within  the  last  week  we  have  introduced  it'  between  New 
York  and  Chicago,  and  that  it  is  operating  perfectly  well.  And  now,” 
said  he,  44  whenever  the  business  exceeds  the  capacity  of  our  present 
lines,  instead  of  stringing  new  wires  we  shall  use  the  double  transmitters, 
thus  doubling  the  capacity  of  our  lines.”  * 

I  also  stated  three  years  ago  that  the  wires  were  not  properly  insu¬ 
lated  or  connected  at  the  offices ;  that  the  lines  between  New  York  and 
Washington  were  in  such  poor  repair  that  one-half  the  number  of  wires, 
properly  insulated  and  connected,  were  capable  of  performing  the  entire 
business  between  those  two  places  $  and  that  consequently  there  was  a 
1  T 


2 


double  expense  of  operators  and  office  expenses.  There  were  then,  I 
think,  thirty-one  wires  between  New  York  and  Washington,  and  about 
the  same  number  now,  while  the  business  has  nearly  doubled.  Four 
years  ago  8,400  messages  passed  through  the  New  York  office  every  day, 
now  10,500.  There  has  been  an  improvement  in  the  insulation  and  a 
reduction  of  the  expenses. 

I  referred  to  the  feasibility  of  introducing  half-rates  for  night-messages. 
One  of  the  pamphlets  that  were  circulated  by  the  Western  Union 
Telegraph  Company,  in  regard  to  that  suggestion,  was  headed  “  Impos¬ 
sibility  of  utilizing  the  telegraphic  lines  by  night  as  well  as  by  day.”  Yet 
to-day,  gentlemen,  all  know  that  night-messages  are  used  extensively 
wherever  they  have  been  introduced,  and  this,  although  the  business  has 
not  been  facilitated,  by  the  Western  Union  Telegraph  Company.  For  in¬ 
stance,  one  of  their  rules  provides  that  if  a  night-message  is  sent  from  a 
main  office  to  a  small  office  and  arrives  on  Saturday  evening,  it  cannot  be 
delivered  until  Monday  morning,  although  the  man  to  whom  it  is  directed 
may  go  to  the  office  and  demand  it;  by  another  of  the  rules,  if  such  a  mes¬ 
sage  arrives  at  G  or  7  o’clock  in  the  evening, and  the  person  to  whom  it  is 
addressed  asks  for  it,  and  offers  to  pay  the  full  rate,  he  cannot  receive 
it  until  the  next  morning. 

I  stated  that  the  rates  were  irregular,  often  higher  to  the  nearer  than 
to  the  remote  place;  that  while  the  rates  to  Boston  were  40  or  50  cents,  < 
the  rates  to  Waltham,  ten  miles  this  side,  were  $1.75;  and ‘I  said  that 
if  those  rates  were  reduced  and  made  uniform  for  equal  distances,  the 
business  would  be  greatly  increased.  A  new  tariff  has  since  been  put 
into  operation  with  greater  uniformity  of  rates,  and  the  business  has  been 
greatly  increased. 

I  also  stated  that  the  office  expenses  on  all  telegrams  were  very  great; 
that  by  the  adoption  ot  the  postal-telegraph  system  they  could  be  greatly  * 
reduced ;  that  by  the  substitution  of  stamps,  and  invariable  prepay¬ 
ment,  the  present  cumbrous  system  by  which  each  message  is  required 
to  pass  through  sixteen  different  hands  in  being  transmitted  from  one  prin¬ 
cipal  office  to  another  could  be  done  away  with,  and  the  office  business  A 
very  greatly  simplified  and  expenses  reduced.  I  compared  it  to  the  differ¬ 
ence  between  the  old  way  of  transmitting  letters  at  a  high  rate  of  postage 
and  the  present  custom.  Formerly  every  letter  carried  with  it  a  way¬ 
bill,  stating  from  and  to  what  place  it  went,  the  amount  of  postage, 
whether  prepaid  or  not,  and  the  amount  to  be  collected  if  unpaid,  if 
that  system  were  in  operation  to-day  the  postal-service  of  the  country 
could  not  be  performed,  as  it  would  require  more  clerks  and  time  than 
could  possibly  be  given  between  the  receipt  of  the  letters  and  dispatch  of 
the  mail.  So  great  has  been  the  reduction  of  expense  that  they  are 
no  greater  in  proportion  to  the  receipts  than  they  were  when  the 
rates  were  G,  18,  and  24  cents  for  each  letter. 

I  also  stated  that,  as  the  telegraph  business  increases,  the  expenses 
do  not  increase  in  a  corresponding  ratio.  For  instance,  as  I  showed  by 
the  statistics  of  the  European  telegraph  lines  and  of  the  Western  Union 
Telegraph  Company,  if  the  business  increased  100  per  ceht.,  the  expenses, 
instead  of  increasing  at  the  same  rate,  increased  only  about  55  per  cent, 
abroad  and  37£  per  cent,  in  this  country;  and  that,  if  the  rates  were 
reduced  33J  per  cent,  and  the  business  doubled,  the  net  profits  would 
be  increased;  and  that,  consequently,  a  reduction  of  rates  could  be 
made  as  the  business  increased..  I  showed  by  the  figures  that  in  Belgium 
and  Switzerland,  when  the  rates  were  reduced  50  per  cent,  there 
was  within  the  first  year  an  increase  of  the  business  of  oyer  100  per 
cent.,  followed  in  the  next  year  by  an  increase  of  15  or  20  per  cent.,  so 


23«’MZ.r. 


3 


V  L  O  ( 


that  after  a  few  years  the  net  receipts  were  nearly  as  large  as  under  the 
higher  rates. 

Most  of  these  facts  are  stated  either  in  the  report  of  my  friend,  Mr. 
Palmer,  or  that  of  the  Senate  committee. 

Although  these  inventions  have  been  adopted,  although  the  wires 
have  been  improved  and  the  business  greatly  increased,  yet  there  has 
been  no.  corresponding  reduction  of  rates.  I  have  a  statement  of  the 
rates  in  1868  and  1872  between  the  same  offices.  In  1868  the  rates  in 
the  East. were — 

Under  250  miles,  34  cents  ;  they  are  now  37  cents. 

Between  250  and  500  miles,  73  cents;  they  are  now  62  cents. 

Between  500  and  1,000  miles,  $1.43;  they  are  now  $1.23. 

Between  1,000  and  1,500  miles,  $2.41 ;  they  are  now  $2.14. 

I  also  stated  then,  what  is  as  true  to-day  as  it  was  then,  that  the  rates 
at  the  West  are  nearly  twice  as  high  for  the  same  distance  as  they  are 
at  the  East.  Thus,  the  rates  at  the  West  were  then — - 
Under  250  miles,  79  cents;  they  are  now  03  cents;  in  the  East,  37 
cents ; 

From  250  to  500  miles,  $1.33;  they  are  now  $1.17;  in  the  East,  62 
cents ; 

From  500  to  1,000  miles,  $2.06;  they  are  now  $1.76;  in  the  East, 
$1.23; 

making  a  reduction  of  from  15  to  20  per  cent.  only. 

A  statement  is  made  in  the  “  Memorial  of  the  Western  Unioii  Tele¬ 
graph  Company  v  that  within  the  last  six  years  the  rates  have  been 
reduced  50  iier  cent.  Now,  although  Iplo  not  know  exactly  what  they 
were  six  years  ago,  yet  I  think  that  a  careful  comparison  would  show  that 
between  the  principal  cities  of  the  country  the  rates  are  higher  to  day 
than  they  were  then.  Six  years  ago  the  wires  of  the  United  States 
Telegraph  Company  ran  over  the  country,  and  the  rates  of  telegraphing 
were  very,  low  between  large  cities.  Mr.  Orton  was  the  president  of 
that  company.  The  United  States  Telegraph  Company  was  purchased 
in  1866  by  the  Western  Union  at  a  cost  of  $13,000,000,  and  the  rates  raised 
in  many  parts  of  the  country.  I  stated  that  it  was  possible  that  such  a 
man  as  Commodore  Vanderbilt,  with  a  comparatively  small  expenditure 
of  money,  could  obtain  the  control  of  all  the  telegraph  lines  of  the  country. 
What  I  then  stated  as  a  possibility  was  then  actually  taking  place.  Com¬ 
modore  Vanderbilt  was  then  purchasing  the  stock  of  the  Western  Union 
Telegraph  Company,  and  within  less  than  six  months,  at  the  next  annual 
election,  the  control  of  the  company  passed  into  the  hands  of  the  family 
V.  and  friends  of  Mr.  Vanderbilt,  and  it  can  be  made  subservient  to  their 
V  railroad  or  other  interests. 

A:  Let  us  now  consider  the  influence  which  this  interest  exerts  over  the 

vs  people  of  the  country,  and  first  on  the  press.  The  rates  to  the  press 
are  regulated  by  the  Western  Union  Telegraph  Company.  That  com¬ 
pany  can  raise  or  depress  them,  according  to  its  own  will;  and  it  has, 

.  as  these  reports  will  show,  in  times  past,  so  raised  the  rates  as  to 
crush  out  more  than  one  paper.  There  is  nothing  that  presses  with 
-  so  great  a  weight  upon  the  leading  editors  through  the  country  as 
this  monopoly.  I  have  conversed  with  editors  of  the  leading  papers 
from  different  sections  of  the  country,  and  know  that  they  feel 
the  power  of  this  company,  and  in  secret  pray  that  there  may  be  some 
deliverance  from  the  weight  under  which  they  groan.  I  think  it  is 
known  to  some  of  this  committee  that  within  a  year  past  the  Western 
Union  Telegraph  Company  issued  a  notice  that  if  any  paper  undertook 
to  criticise  any  of  the  telegraphic  news  furnished  to  it  such  paper  would 


4 


be  excluded  from  receiving  news;  and  that  a  paper  in  a  neighboring 
city,  which  criticised  the  telegraphic  news,  was  cut  off  and  a  notice  of 
that  fact  and  of  the  cause  sent  to  all  the  papers  in  that  section  of  the 
country. 

Mr.  Sargent.  Does  that  refer  to  the  criticism  of  the  news  ! 

Mr.  Hubbard.  So  I  understand  it. 

Mr.  Palmer.  I  think  the  criticism  was,  that  the  reports  had  been 
directly  manipulated  by  the  operator  or  by  the  agent  of  the  Asso¬ 
ciated  Press,  or  something  of  that  kind. 

Mr.  Hubbard.  We  will  next  consider  the  influence  it  possesses  over 
the  commercial  news.  The  commercial  news  from  Europe  is  received  at 
New  York  every  morning,  and,  with  the  prices  of  that  city,  is  sent  over 
the  wires  throughout  the  length  and  breadth  of  the  country.  The  in¬ 
stant  that  news  is  received  at  New  York  all  other  business  over  the 
wires  on  which  it  is  to  be  transmitted  is  suspended  until  this  news  is 
sent.  Thus  it  has  preference  over  all  the  other  business  of  the  country. 

I  do  not  mean  to  say  that  this  is  not  right;  I  merely  speak  of  it  as  "a 
fact  that  there  is  now  preferred  business.  The  present  bill  proposes  to 
legalize  that  which  is  now  done  contrary  to  law,  and  one  of  the  argu¬ 
ments  made  against  the  bill  in  this  memorial  of  the  Western  Union  Tele¬ 
graph  Company  is  that  it  allows  preferred  business.  With  what  pro¬ 
priety  that  argument  is  made  can  be  seen  when  it  is  known  that  that 
company  uses  its  wires  for  its  own  benefit  in  preferring  business. 

All  the  telegraphic  correspondence  of  the  United  States  is  preserved 
and  filed  in  the  records  of  the  company.  Not  only  are  the  original  mes¬ 
sages  preserved,  but  in  the  city  of  New  York  two  steam  copying-presses 
are  kept  constantly  at  work,  on  which  letter-press  copies  are  made. 
They  object  to  the  present  bill,  which  provides  for  the  destruction  of  the 
telegrams  within  thirty  days,  that  it  will  obliterate  the  evidences  of  con¬ 
tract,  and  render  impossible  the  gathering,  after  thirty  .days,  of  the, 
traces  of  crime ;  that  is,  this  company  has  become  the  registry  of  the 
contracts  of  the  nation,  and  the  great  inquisition -house  where  all  the 
secrets  of  every  one  that  uses  the  telegraph  are  filed  and  preserved  for 
future  reference.  What  use  has  been  made  of  these  secrets,  the  walls 
of  some  of  these  committee-rooms  can  answer.  What  use  can  be  made 
of  them  is,  of  course,  evident  to  every  one.  These,  then,  are  instances 
of  the  power  which  this  company  possesses  over  the  press,  the  com¬ 
mercial  news,  and  the  private  correspondence  of  the  nation. 

I  admit  that  it  is  a  necessity  that  this  business  can  bq  more  economi¬ 
cally  managed  by  a  single  company  than  by  many.  It  is  one  of  the 
tendencies  of  the  present  day  to  monopolize  all  business.  The  sales  in 
the  retail  store  of  Mr.  Stewart  average  $75,000  a  day,  and  are  larger 
in  a  week  than  were  made  in  a  year  by  any  single  firm  in  New  York  at  the 
time  he  commenced  business.  Formerly  there  were  half  a  dozen  railroad 
corporations  between  New^  York  and  Buffalo,  and  as  many  more  between 
Buffalo  and  Chicago.  Now  there  are  only  two  between,  and  these 
controlled  by  one  man,  Commodore  Vanderbilt.  Formerly  separate  * 
telegraph  companies  were  organized  in  every  section  of  the  country. 
Now,  one  company  has  gradually  gathered  into  its  net  all  other  com¬ 
panies,  until  its  ramifications  extend  all  over  the  country,  east,  west, 
north,  and  south,  until  it  performs  nine-tenths  of  the  telegraph  business 
of  the  country;  and  as  the  business  of  the  country  extends  from 
the  extreme  east  to  the  west,  we  must  have  these  monopolies.  The 
question  then  is,  how  are  they  to  be  controlled?  Shall  they  be 
managed  by  parties  for  their  own  interests,  contrary  to  the  interests 
of  the  people,  or  shall  they  be  controlled  and  managed  by  the  people  for 


i 


their  interests?  The  pending  hill  proceeds  on  the  assumption  that  a  tele¬ 
gram  is  like  a  letter,  differing  from  it  only  in  the  means  of  transmission  ; 
and  that,  as  the  postal  service  has,  from  time  to  time,  adopted  new 
methods  of  transmitting  correspondence — now  the  steamboat,  and  then 
the  railroad — so  it  must  adopt  the  telegraph  as  the  latest  and  most 
improved  method.  This  bill  proposes  a  system  in  analogy  with  the 
present  mail  service.  Two  methods  are  now  in  operation  for  contracting 
for  the  transmission  of  the  mails.  Where  there  is  a  fixed  perma¬ 
nent  way,  as  in  railroads,  requiring  a  large  investment  in  realty,  Con¬ 
gress  fixes  the  compensation,  and  tbe  Postmaster  General  contracts 
at  these  rates.  Where  there  is  no  fixed  investment,  but  the  mere  use  of 
the  roadway  by  coaches  and  horses,  he  contracts  with  the  lowest  bidder. 
More  than  one-half  of  the  mileage  and  three-fourths  in  bulk  of  the 
mails  are  transported  by  contract  at  rates  fixed  by  Congress.  The 
lines  of  telegraph  are  fixed  and  permanent,  belonging  to  the  realty.  In 
carrying  out  the  policy  adopted  in  such  cases  the  seventh  section 
authorizes  the  Postmaster  General  to  contract  with  the  Postal  Tele¬ 
graph  Company  for  the  transmission  of  telegrams  for  a  term  of  ten 
years. 

Over  three-fourths  of  all  the  employes  will  be  hired  and  paid  by  the 
telegraph  company.  A  large  proportion  of  the  remainder  will  be  clerks 
who  are  now  employed  by  the  Post-Office  Department,  requiring  but  a 
few  additional  employes  beyond  those  now  engaged  in  the  Department. 
It  has  been  said  that  the  Department  would  incur  a  large  expense  for 
office-room  for  the  company.  In  Boston,  New  York,  Chicago,  Saint 
Louis,  New  Orleans,  and  in  very  many  cities  of  a  secondary  importance, 
new  post-offices  are  now  being  constructed.  In  Cincinnati,  Philadel¬ 
phia,  and  many  others,  new  post-offices  will  soon  be  required.  These 
buildings  are  very  high,  in  order  to  give  them  the  proper  architectural 
effect  j  and  as  the  upper  part  of  those  buildings  will  not  be  required 
for  the  mail  service,  they'  can  be  used  for  the  operators  of  the  telegraph 
company. 

The  bill  provides  that  every  post-office  shall  be  a  postal-telegraph 
office.  It  does  not  propose  to  supersede  any  of  the  existing  telegraph 
offices,  but  to  add  a  large  number  to  the  existing  offices.  The  present 
system  is  substantially  a  railroad  system,  as  was  so  forcibly  explained 
in  the  able  speech  of  Mr.  Palmer  in  the  House. 

The  English  system  was  substantially  a  railroad  system ;  but  on 
the  transfer  to  the  post-office,  it  was  found  that  although  the  num¬ 
ber  of  offices  are  about  equally  divided  between  the  railroads  and  the 
postal- telegraph  offices,  yet  only  10  per  cent,  of  the  telegrams  are  sent 
•  through  the  old  offices — so  much  greater  is  the  convenience  of  the  post- 
offices. 

It  is  stated  in  opposition  to  the  plan  that  it  creates  a  company  merely 
to  supersede  an  existing  monopoly,  and  the  question  is  asked,  Why 
should  a  new  corporation  be  created?  If  the  new  corporation  possesses 
the  same  powers  as  the  present  one,  there  is  no  reason  why  it  should 
be  created.  Unless  the  new  corporation  is  a  creature  of  the  law,  and 
its  interests  subordinate  to  the  interests  of  the  people,  this  bill  should 
not  be  passed.  The  W estern  Union  Telegraph  Company  is  incorporated 
by  the  State  of  New  York.  Its  lines  extend  throughout  the  country 
into  every  State  and  Territory;  yet  the  law  of  the  State  of  New  York, 
by  which  it  is  incorporated  and  governed,  does  not  extend  beyond  the 
limits  of  the  State.  The  powers  of  the  company  are  subject  to  the  same 
limitations  and  its  lines  extend  into  other  States  only  through  the  comity 


6 


of  such  States.  Therefore  it  cannot  be  under  any  general  law.  That 
company  is  a  law  unto  itself. 

Mr.  Clark  inquired  whether  the  Western  Union  Telegraph  Company 
had  not  permission  from  the  States  to  pass  through  them  with  its  lines. 

Mr.  Hubbard.  Every  State  in  the  Union  has  enacted  laws  author¬ 
izing  any  telegraph  company  to  erect  lines  within  its  boundaries,  but 
there  is  nothing  to  prevent  any  State  repealing  such  laws  at  any  time. 
There  is  no  possibility  of  a  general  system  under  State  laws.  Under 
the  proposed  system,  the  corporation  will  be  a  creature  Of  Congress, 
subject  to  rules  and  regulations  prescribed  by  the  Postmaster  General 
for  the  government  of  the  company.  By  its  provisions,  telegraph  lines 
are  made  post-roads.  Every  telegraphic  message,  according  to  the 
opinion  of  the  Attorney  General,  is  a  commercial  communication,  and, 
as  such,  comes  under  the  provisions  of  the  Constitution  which  gives 
Congress  the  authority  to  regulate  commerce  between  the  States. 
Therefore,  wherever  the  wires  of  this  company  extend,  there  the  law 
will  follow.  The  company  will  be  a  creature  of  the  law,  subject  and 
subordinate  to  it.  The  Western  Union  Telegraph  Company  is  one  of 
the  few  public  corporations  not  required  to  publish  any  reports.  All 
railroad  companies  are  obliged  to  publish  their  reports.  I  do  not  pre¬ 
tend  that  Congress  or  the  legislature  of  any  State  has  the  right  to 
inspect  the  concerns  of  private  corporations.  But  a  telegraph  company 
is  not  and  cannot  be  considered  a  private  company.  The  present  bill 
provides  that  regular  accounts  shall  be  forwarded  by  the  company  to 
the  Postmaster  General;  that  the  Postmaster  General  shall  be  a  direc¬ 
tor  of  the  company,  so  that  all  its  operations  shall  be  known  to  the 
representatives  of  the  people  and  to  the  people  themselves. 

The  capital  of  the  Western  Union  Telegraph  Company  is  only  limited 
to  such  an  amount  as  it  can  float  upon  the  market.  The  way  in  which 
the  capital  has  been  increased  is  shown  in  the  report  of  the  Senate 
Committee  on  Post-Offices.  Gentlemen  will  find  that  there  is  no 
instance  of  so  large  a  capital  with  so  slight  a  substructure  of  cash.  The 
largest  percentage  of  stock  dividend  which  that  company  has  ever  de¬ 
clared  was  414  per  cent.,  and  the  largest  in  amount  eleven  millions  of 
dollars.  Whether  the  gentlemen  who  now  control  this  company  will 
be  likely  to  make  further  stock  dividends  their  course  in  the  manage¬ 
ment  of  the  Hudson  River  and  Rew  York  Central  and  the  Lake  Shore 
Railroads  will  show. 

The  present  bill  fixes  the  capital  at  the  actual  cost  of  lines  that 
may  be  purchased  or  constructed,  and  there  cannot  be  any  stock  divi¬ 
dends.  The  present  company  can  raise  or  depress  its  rates  as  its  interests 
dictate,  whereas  the  present  bill  fixes  the  rates,  both  for  ordinary  and 
for  press  messages. 

The  object  of  the  directors  of  the  Western  Union  Telegraph  Company 
is,  primarily,  to  make  money  for  its  stockholders,  then  to  subserve 
whatever  other  interests  they  may  have,  and,  lastly,  the  interests  of  the 
public.  I  think  that  all  the  gentlemen  of  this  committee  will  agree 
that  in  the  mail  and  telegraph  the  public  interests  should  be  primary, 
and  the  interests  of  the  stockholders  secondary.  Such,  it  is  believed, 
will  be  the  effect  of  the  pending  bill. 

We  have  already  referred  to  the  question  whether  the  business  will 
pay  at  the  greatly  reduced  rates.  That  subject  was  fully  considered 
two  years  ago,  and  the  only  objection  my  friend  Mr.  Beck  then  made 
to  the  bill  was  the  fear  on  his  part  that  the  rates  were  so  low  that  the 
company  might  fail,  the  Government  take  possession  of  the  telegraph, 
and  that  it  would  become  a  Government  telegraph,  and  he  thought 


7 


such  a  monopoly  was  more  to  he  feared  than  the  present.  To  obviate 
that  objection  the  rates  in  this  bill  have  been  materially  raised.  Tne 
rates  then  proposed  were  25  cents  for  every  circuit  of  five  hundred 
miles.  Now  they  are  25  cents  for  a  circuit  of  two  hundred  and  fifty 
miles,  50  cents  for  a  circuit  of  five  hundred  miles,  and  25  cents  for  every 
added  circuit  of  five  hundred  miles.  These  rates  have  been  adopted  for 
Government  telegrams, ,  after  a  very  careful  examination  of  the  whole 
subject  by  Mr.  Whiting,  the  assistant  attorney  general  for  all  matters 
relating  to  telegraphs.  In  the  last  report  of  the  Postmaster  General  it 
is  stated  that  these  rates  are  a  reduction  of  45  per  cent,  on  the  previous 
rates,  and  will  yield  a  fair  net  profit. 

The  bill  has  been  also  changed  in  another  respect  and  provides  that 
the  entire  property  of  the  company  shall  be  subject  to  the  performance 
of  its  contract.  It  will  require  some  twenty  or  thirty  millions  of  dollars 
for  the  purchase  and  construction  of  the  necessary  lines,  and  that  amount 
of  property  must  be  exhausted  before  the  Government  can  be  called 
upon  in  any  way.  The  bill  also  provides  that,  if  the  company  should 
fail,  the  Postmaster  General  may  take  possession  of  the  lines  and  lease 
them  to  any  responsible  party  who  will  perform  the  service  at  the  rates 
fixed  by  the  bill. 

Mr.  Sargent.  What  would  be  the  rates  to  San  Francisco  under  this 
bill? 

Mr.  Hubbard.  Two  dollars  for  a  day  and  a  dollar  for  a  night-mes¬ 
sage.  The  second  section  provides  that  the  charges  shall  be  uni¬ 
form  for  equal  distances  at  a  rate  not  exceeding  one  cent  a  word  for 
each  circuit  through  which  it  shall  be  transmitted,  to  be  computed  as 
follows :  u  For  distances  under  five  hundred  miles,  two  hundred  and 
fifty  miles  shall  be  deemed  a  circuit;  for  greater  distances,  five  hundred 
miles  shall  be  deemed  a  circuit;  for  telegrams  directed  to  be,  transmit¬ 
ted  by  night,  one  thousand  miles  shall  be  deemed  a  circuit;  all  words 
shall  be  counted,  and  no  communication  shall  be  transmitted  at  a  rate 
less  than  25  cents  a  circuit.” 

Mr.  Sargent.  This  makes  a  message  of  twenty-five  words  an  ordi¬ 
nary  message? 

Mr.  Hubbard.  Yes;  counting  the  address  and  signature.  The  ordi¬ 
nary  message  now  is  ten  free  words.  The  average  length  of  the  ad¬ 
dress  and  signature  is  seven  words,  which  will  therefore  allow,  under 
this  system,  eighteen  free  words  against  ten,  an  increase  of  80  per  cent. 

I  have  used  the  telegraph  freely  in  Europe,  where  they  pay  for  all  the 
words,  and  all  superfluous  words  are  omitted  from  the  address  and  sig¬ 
nature.  The  signature  frequently  contains  nothing  but  the  last  name. 

Mr.  Sargent  remarked  that  he  had  received  a  cable  dispatch  the 
other  day  without  any  signature,  knowing  by  the  contents  from  whom 
it  came. 

Mr.  Hubbard.  Those  who  correspond  by  the  cable  often  omit  every¬ 
thing  but  the  address. 

The  committee  know  that  another  plan  for  the  union  of  the  postal  and 
telegraph  service  has  been  proposed  by  the  Postmaster  General,  that  of 
a  Government  telegraph.  That  proposition  is  opposed  by  Mr.  Beck  and 
others  on  the  ground  of  the  great  expense  which  it  wrould  occasion  to 
the  Government,  as  tire  lines  cannot  be  purchased  for  less  than  their 
market  value,  between  thirty  and  forty  millions  of  dollars,  and  on  account 
of  the  great  power  conferred  upon  the  Executive.  The  committee  will 
observe  that  in  the  plan  proposed  by  this  bill  there  is  no  additional  power 
conferred  upon  the  Executive,  and  that  the  power  possessed  by 
the  present  telegraph  companies  is  divided  between  the  post-office  and 


8 


the  company,  so  that,  without  a  combination  between  those  two  interests, 
there  can  be  no  great  political  or  any  malign  influence  exerted  through 
the  telegraph. 

It  was  said  that  it  would  increase  the  patronage  of  the  Government. 
That  objection  also  is  obviated  by  the  present  plan,  which  will  probably 
require  an  addition  not  exceeding  one  per  cent,  to  the  post-office  ein-„ 
ployes. 

The  present  bill  provides  that  the  Post-Office  Department  shall  furnish 
the  stamped  paper  on  which  the  telegram  is  written,  the  office-room  for 
the  operators,  and  the  batteries  ;  that  it  shall  deliver  the  telegram  to 
the  operator  at  one  end  of  the  line,  and  that  the  receiving  operator  ^hall 
write  it  out  and  deliver  it  to  the  postmaster,  who  is  to  furnish  the  envel¬ 
ope,  inclose,  direct,  and  deliver  it. 

The  Chairman.  Does  this  bill  contemplate  a  surrender  of  sufficient 
space  in  the  post-offices  to  the  telegraph  company,  so  that  the  company 
can  control  it  for  all  purposes  or  only  for  postal  purposes? 

Mr.  Hubbard.  Only  for  postal  purposes. 

The  Chairman.  Do  you  suppose  that  the  company  will  have  offices 
besides  thcfse  which  the  Host-Office  Department  will  furnish? 

Mr.  Hubbard.  They  can  have  offices  if  they  please.  The  expectation, 
of  course,  is  that  the  present  post-offices  will  accommodate  the  public 
sending  telegrams,  as  they  now  do  those  sending  letters. 

Mr.  Niblaok.  If  I  understand  you,  your  proposition  is  that  the  tele¬ 
graph  companies  are  simply  to  furnish  the  Government  with  facilities 
for  transmitting  telegrams  and  to  transmit  them  under  contract,  just  as 
railroads  now  furnish  transportation  for  the  mails. 

Mr.  Hubbard.  Yes,  sir. 

Mr.  Clark.  There  are  now  three  or  four  telegraph  offices  in  Wash¬ 
ington.  Do  you  mean  to  say  that  there  shall  be  but  one  office  here, 
and  that  that  shall  be  at  the  post-office? 

Mr.  Hubbard.  The  bill  provides  that  the  Government  shall  furnish, 
wherever  it  is  for  the  public  interest,  postal-telegraph  offices.  It  also 
provides  that  the  company  may  have  offices  at  other  places  at  its  own 
expense.  It  is  not  contemplated  to  decrease  the  offices  in  any  place. 

Mr.  Hale.  In  the  same  towns  and  cities  where  there  is  a  jiostal  tele¬ 
graph  » 

Mr.  HubbIrd.  Yes,  sir. 

The  Chairman.  How  will  that  work  where  there  is  an  office  outside 
of  the  posboffice  ?  How  are  you  to  distinguish  between  those  messages 
that  are  controlled  by  the  Post-Office  Department  and  those  that  are 
not? 

Mr.  Hubbard.  All  the  telegrams  sent  over  the  wires  of  the  company 
are  to  be  prepaid  by  telegraph  stamps. 

The  Chairman.  So  that  even  those  offices  which  are  not  post-offices 
must  use  the  stamp  ? 

Air.  Hubbard.  Yes,  sir. 

Mr.  Hale.  Let  me  state  what  seems  to  me  a  practical  difficulty.  In 
my  district,  a  country  district,  there  are  thirteen  post-offices,  where  the 
amount  of  receipts  would  be  above  $500,  as  fixed  in  your  bill.  I  think 
that  there  are  not  more  than  one  or  two  of  those  offices  in  which  there 
is  more  than  one  room  used  as  a  post-office.  That  is  customary  in 
these  small  places.  Now,  the  bill  provides  that  the  Postmaster  General 
shall  furnish  suitable  and  convenient  accommodations  at  every  postal- 
telegraph  office  for  the  office  employes,  the  instruments,  and  the  battery 
of  the  company  required  for  its  business.  How,  shall  the  operator  of 
the  telegraph  company  be  put  into  the  post-office,  (where  at  present 


9 


there  is  nobody  but  Government  employes,  appointed  by  the  Govern¬ 
ment  and  responsible  to  the  Government,)  and  do  his  work  there  as  an 
employe  of  the  company,  or  shall  the  Post-Office  Department  furnish  a 
room  outside'?  Has  that  difficulty  occurred  to  you;  and,  if  so,  how  do 
you  answer  it  ? 

Mr.  .Hubbard.  The  bill  provides  that  every  postmaster  may  act  as 
a  telegraph  operator.  Practically  speaking,  in  the  case  to  which  you 
refer,  there  will  be  a  little  machine  in  one  corner  occupying  but  two  or 
three  feet  of  space,  and  the  postmaster  himself,  or,  more  commonly,  one 
of  his  sons  or  daughters  will  act  as  operator. 

Mr.  Clark.  Section  13  provides  that  the  company  may,  at  its  own 
expense,  establish  and  maintain  offices  independent  of  those  established 
by  the  Postmaster  General  for  the  reception,  transmission,  and  delivery 
of  telegrams  prepaid  by  stamps,  and  that  any  postmaster  may  act  as 
operator  under  an  arrangement  by  the  telegraph  company  with,  the 
Postmaster  General. 

Mr.  Hale.  That  is  the  point.  This  bill  provides  that  the  Postmaster 
General  shall  furnish  accommodations  for  the  telegraph  office,  its  em¬ 
ployes,  instruments,  and  batteries.  Now,  supposing  that  the  company 
sees  fit  to  send  an  employe  of  its  own  to  a  given  office  and  will  make 
no  arrangement  with  the  Postmaster  General,  what  is  to  be  done  in  that 
case  ?  The  bill  provides  that  the  Government  shall  furnish  room  in  its 
offices  for  the  telegraph  employes. 

Mr.  Dickey.  I  suppose  the  Postmaster  General  is  not  bound  to  fur¬ 
nish  room  unless  the  company  makes  an  arrangement. 

Mr.  Clark.  The  bill  provides  that  u  in  case  any  question  should  arise 
between  the  company  and  the  Postmaster  General,  it  shall  be  referred 
to  the  decision  of  three  arbitrators,  to  be  appointed  by  the  Attorney 
General  of  thq  United  States  on  application  of  either  of  said  parties, 
and  their  decision  shall  be  final  and  binding.” 

Mr.  Hubbard.  I  do  not  suppose  that  the  Postmaster  General  will  be 
bound  in  that  case  to  establish  a  postal-telegraph  office  at  that  place. 

Mr.  Clark.  Suppose  the  Postmaster  General  should  not  supply  you 
with  an  office,  and  should  not  allow  any  of  his  clerks  or  postmasters  to 
act  as  operators,  and  that  the  company  itself  employ  them;  if,  by  reason 
of  this,  their  receipts  are  such  that  the  company  does  not  receive  10  per 
cent,  dividend,  then  you  have  a  right  to  raise  your  rates  so  that  you  will 
be  able  to  pay  that  dividend? 

Mr.  Hubbari}.  Unfortunately  there  is  no  provision  in  the  bill  for  that. 

Mr.  Clark.  There  is  a  provision  that  you  may  raise  the  rate  so  as  to 
pay  the  dividend. 

Mr.  Hubbard.  No,  sir;  excuse  me,  there  is  a  provision  of  this  kind: 
that  if  the  rates  be  reduced  so  low  that  they  will  not  pay  10  per  cent.,  then 
the  rates  can  be  raised  to  the  amount  from  which  they  were  reduced. 
They  can  be  put  back  again,  but  not  above  the  rates  fixed  in  the  bill. 

Mr.  Clark.  If  that  is  so,  I  should  like  to  know  who  would  take  the 
stock  in  the  company. 

Mr.  Dickey.  That  is  a  practical  question. 

Mr.  Clark.  If  you  are  not  to  receive  over  10  per  cent.,  with  all  the 
hazards  of  the  whole  property  being  forfeited  to  the  Government,  the 
stock  will  not  be  very  desirable. 

Mr.  Sargent.  It  seems  as  if  these  telegraph  people  were  driving  a 
very  hard  bargain  against  themselves.  The  question  is  whether  it  is  a 
good  bargain  for  the  Government. 

Mr.  Clark.  I  want  to  know  whether  we  are  getting  up  something 
that  will  probably  succeed  or  not. 


10 


Mr.  Hubbard.  That  is  a  legitimate  question — whether  the  rates  fixed 
in  this  bill  will  pay.  I  think  the  memorial  of  the  Western  Union  Tele¬ 
graph  Company  will  answer  that  point.  It  says :  u  Upon  .what  princi¬ 
ple  and  for  what  reason  the  particular  persons  named  in  this  bill  are 
proposed  to  be  made  the  recipients  of  a  franchise  never  granted  by  Con¬ 
gress  before,  and  of  immense  pecuniary  value  P  We  have,  therefore,  the 
opinion  of  Messrs.  William  Orton,  Horace  F.  Clark,  E.  D.  Morgan,  Moses 
Taylor,  Alonzo  B.  Cornell,  and  Augustus  Schell,  that  this  franchise  is 
of  great  value,  and  those  gentlemen  are  competent  judges.  I  think  that 
if  Mr.  Orton  was  here  he  would  not  say  the  Postal  Telegraph  Company 
would  not  make  money.  Mr.  Whiting,  from  his  examination,  is  of  the 
opinion,  already  given  by  him,  that  those  rates  will  yield  a  profit  of  30 
per  cent,  on  the  business.  * 

Mr.  Clark.  I  am  of  opinion  that  the  rates  can  be  made  to  pay,  but  I 
also  am  of  opinion  that,  with  a  limitation  of  dividend  to  10  per  cent., 
people  will  not  be  willing  to  invest  in  the  stock.  Take  the  Western 
Union  Telegraph  Company:  its  capital  is  now  forty  millions,  but  the 
real  value  of  the  property  is  not  more  than  ten  millions.  It  is  its  busi¬ 
ness  that  makes  it  so  valuabfe,  just  as  the  good-will  of  a  newspaper 
establishment. 

The  Chairman.  I  want  to  ask  you  whether  there  is  any  provision  in 
this  bill  that  Congress  may  hereafter  diminish  the  rates. 

Mr.  Hubbard.  The  bill  is  made  subject  to  any  modifications  that  Con¬ 
gress  may  make. 

The  Chairman.  It  is  not  at  all  unreasonable  to  suppose  that  in  the 
wonderful  progress  of  inventions  and  discoveries,  like  that  which  you 
have  mentioned — the  double  transmitter — some  invention  may  be  devel¬ 
oped  in  the  course  of  a  few  years  which  will  reduce  very  greatly  the 
present  cost  of  telegraphing. 

Mr.  Dickey.  The  tenth  section  provides  that  Congress  may  at  any 
time  alter  and  amend  this  act. 

The  Chairman.  Yes ;  that  meets  the  question. 

Mr.  Hubbard.  I  can  say  to  Mr.  Clark  that  men  of  means  in  the  coun¬ 
try  are  ready  to  embark  in  this  enterprise  at  those  rates. 

Mr.  Clark.  Then  that  is  all  right. 

Mr.  Hubbard.  The  dividends  are  limited,  but  the  parties  believed 
that  with  a  fixed  10  per  cent,  dividend  it  will  be  a  good  paying  stock  ; 
and  in  Hew  England  thatje very  railroad  that  pays  a  regular  dividend  of 
10  per  cent,  is  40  or  50  per  cent,  above  par. 

We  will  compare  the  office-work  required  of  a  post-office  on  telegrams 
with  that  on  letters.  The  Department  furnishes  the  stamps,  delivers  the 
letters  to  the  railroad  or  other  carriers,  receives  and  delivers  them  two- 
thirds  by  special  carriers  and  one-third  by  the  general  delivery.  There 
is  more  office  work  done  for  telegrams  than  for  letters.  The  office  ex¬ 
penses  on  each  letter  are  1J  cents.  The  Department  is  to  receive  on 
every  telegram  5  cents,  which  is  3J  cents  for  the  extra  service  performed, 
and  which,  it  is  believed,  will  be  an  ample  compensation.  It  is  already 
in  contemplation  to  have  an  hourly  delivery  of  letters  within  the  Busi¬ 
ness  portions  of  the  large  cities.  Telegrams  then  will  be  sent  to  the 
post-office,  and  delivered  by  carriers  every  hour.  Any  one  acquainted 
with  the  present  telegraph  system  and  with  the  delays  and  vexations 
caused  by  the  messenger  boys,  will  understand  that  it  will  be  much  .more 
prompt  than  the  present  delivery. 

What  will  be  the  future  of  the  telegraph  ?  I  have  stated  the  increase 
of  business  at  Hew  York  City  since  1868,  from  8,400  to  16,500  messages 


11 


a  day.  That,  gentlemen,  is  but  a  mere  beginning.  Tlie  great  difficulty 
under  the  present  system  is  that  where  the  telegraph  is  most. needed 
there  it  is.  the  least  used.  The  rates  between  remote  places  are  so  high 
as  to  be  prohibitory.  Under  the  present  bill  California  will  be  brought 
as  near  New  York  as  Chicago  now  is.  •  The  rates  to  Chicago  are  $1,  and 
will  then  be  the  same  to  San  Francisco  by  night.  When  telegrams  can 
be  sent  for  25  cents  by  night  between  places  one  thousand  miles  apart, 
the  business  will  receive  such  an  impulse  as  has  never  been  seen.  The 
mail  delivery,  which,  under  the  reduced  rates  of  postage,  increased  from 
45,000,000 'letters  a  year  to  about  000,000,000,000,  is  an  indication  of 
the  great  increase  when  the  postal  telegraph  is  brought  within  the 
reach  of  all. 

The  invention  of  the  double  transmitter  has  been  already  referred  to. 
There  is  a  line  between  here  and  New  York  known  as  the  automatic 
telegraph,  by  which  messages  are  transmitted,  it  is  stated,  at  the  rate 
of  six  hundred  words  a  minute. 

Mr.  Clark.  I  have  seen  that  machine  at  work. 

Mr.  Whiting.  Bo  you  refer  to  the  stock  machine  f 

Mr.  Hubbard.  No  ;  the  automatic  instrument.  General  Dodge  has 
told  me  that  it  has  transmitted  messages  for  him  at  the  rate  of  six  hun¬ 
dred  words  a  minute.  The  great  difficulty  with  it  is  receiving  the  mes¬ 
sages.  There  seems  to  be  no  limit  to  the  speed  with  which  it  can  be 
worked.  Although  this  invention  is  not  perfected  here,  others  on  some¬ 
what  similar  principles  are  perfected  in  England  ;  and  there  I  have  seen 
messages  sent  at  the  rate  of  one  hundred  and  fifty  to  two  hundred  and 
fifty  words  a  minute.  I  believe  the  time  will  speedily  come  when  every 
merchant  will  have  in  his  counting-room  a  machine  for  punching 
messages,  worked  with  keys  as  you  play  upon  a  piano ;  that  he  will 
punch  his  messages,  send  them  to  the  telegraph  office,  and  have  them 
transmitted  by  the  automatic  machine.  If  Mr.  Orton  were  here  he 
would  say  that  that  is  another  of  our  theories ;  but  it  is  no  more  im¬ 
probable  than  the  double  transmitter  seemed  four  years  ago. 

The  question  then  is,  Shall  the  telegraph,  which  promises  boundless 
prospects  for  the  good  of  the  nation,  be  controlled  and  managed  by 
one  man,  or  shall  it  be  controlled  and  managed  by  the  people  and  for 
their  benefit?  # 

Mr.  Clark.  It  is  claimed  on  the  part  of  the  WTestern  Union  Telegraph 
Company  that  they  have  the  exclusive  right  of  all  the  patents  and  in¬ 
struments  that  are  now  in  use. 

Mr.  Hubbard.  There  are  few  patents  of  great  value,  except  this, 
double  transmitter,  and  there  are  two  or  three  patents  for  that. 

Mr.  Clark.  How  is  it  in  regard  to  Page’s  patent  ? 

Mr.  Hubbard.  That  was  granted  by  Congress  three  years  ago.  That 
patent  was  offered  to  me.  I  examined  it  carefully  and  satisfied  myself, 
greatly  to  my  regret,  that  it  could  not  be  sustained,  and  therefore  I 
declined  to  purchase.  Since  then  the  Western  Union  Telegraph  Com¬ 
pany  has  purchased  it.  Mr.  Page  could  not  obtain  a  patent  from  the 
Patent  Office,  as  he  was  one  of  the  examiners,  but  just  before  his  death, 
and  after  he  left  the  Patent  Office,  he  applied  for  a  patent  and  Congress 
granted  it. 

Mr.  Clark.  And  that  he  has  transferred  to  the  Western  Union  Tele¬ 
graph  Company. 

Mr.  Hubbard.  Yes ;  It  was  offered  to  me  for  a  sum  which  I  would 
gladly  have  given  if  I  had  not  believed  that  it  was  of  no  value. 

The  further  hearing  was  adjourned  till  10  o’clock  April  23d. 


12 


Argument  of  R.  R.  Lines  before  the  Committee  on  Appropriations ,  United 
States  House  of  Representatives ,  Tuesday ,  April  23 ,  1872. 

Mr.  Lines,  said : 

Mr.  Chairman  and  Gentlemen  of  the  Committee:  Tlie  gentlemen 
who  have  preceded  me  in  the  discussion  of  this  subject,  before  tliis  com¬ 
mittee  and  elsewhere,  have  presented  so  fully  the  views  which  they 
respectively  hold  that,  were  they  the  only  parties  to  the  issue,  and  theirs 
the  only  interests  involved,  I  should  certainly  not  feel  warranted  in  tres¬ 
passing  on  your  indulgence. 

The  friends  of  the  present  system  of  telegraphs  can  find  no  more  elo¬ 
quent  advocate  than  Mr.  Orton,  and  the  great  consideration  which  Mr. 
Hubbard’s  plan  has  received,  both  here  and  in  the  Senate  is  sufficient 
evidence  of  his  ability. 

There  are  two  points  of  views,  however,  from  which  the  question  has 
yet  to  be  considered — first,  as  affecting  the  interests  of  the  Government 
and  of  the  people  at  large,  (which  interests,  although  rather  prominently 
brought  forward  on  both  sides  of  the  discussion  so  far,  are  yet  of  neces¬ 
sity  a  secondary  consideration  to  the  corporations  now  transacting,  or 
which  it  is  proposed  to  create  for  the  purpose  of  transacting,  the  tele¬ 
graph  business;)  and,  secondly,  as  affecting  the  interests  of  a  large  class 
whose  future  numbers,  compensation,  and  relations  to  the  community 
will  be,  to  a  great  extent,  determined  by  the  action  which  you  may  take 
here — I  mean  the  telegraphers  of  the  country. 

I  have  no  especial  authority  to.  speak  for  either  of  these  interests,  but 
some  study  of  the  subject  from  each  of  the  stand-points  to  which  I  have 
alluded,  both  as*a  citizen  desirous  of  the  welfare  of  my  country,  and  as 
a  telegrapher  anxious  for  the  prosperity  of  a  class  with  which  I  have 
long  been  connected,  has  led  me  to  the  conviction  that  the  absolute 
ownership  and  control  of  the  telegraphs1  by  the  Government  is  the  only 
true  and  wise,  and  that  it  must  be  the  ultimate,  solution  of  this  question  * 
and  it  is  to  this  view,  which  I  understand  to  be  the  view  presented  in 
that  portion  of  the  President's  message  which  you  are  considering,  and 
which  I  know  to  be  favored  by  the  majority  of  disinterested  and  intelli¬ 
gent  telegraphers  throughout  the-  country,  that  I  desire  to  call  your 
attention. 

I  leave  to  others  the  discussion  of  the  abstract  question  as  to  how  far 
the  control  of  the  means  of  transmitting  correspondence  between  differ¬ 
ent  sections  of  the  country  forms  part  of  the  proper  functions  of  Gov¬ 
ernment,  though  this  is  the  only,  country  where  that  question  remains 
an  open  one. 

Whether  and  how  far  interests  acknowledged  to  be  public  can  be 
safely  delegated  to  private  combinations — how  much  longer  we  are  to 
intrust  rights  and  privileges  which  belong  to  the  whole  people  to  these 
vast  corporations,  which,  though  in  theory  intermediary  between  the 
people  and  the  Government,  are  yet  practically  oftentimes  beyond  and 
behind  governments,  less  accessible  and  easy  of  control  by  the  people, 
public  in  their  nature  when  asking  the  public  aid,  and  standing  upon 
their  private  rights  when  it  is  attempted  to  regulate  their  management 
by  law — this  question,  I  say,  although  a  living  and  a  vital  one,  need 
not  be  discussed  here. 

Whatever  general  views  may  be  held  on  that  subject,  it  is.  impossible, 
it  seems  to  me,  to  deny  that  the  post-office  and  the  telegraph  have  but 


13 


one  object,  and  that  tlieir  management  should,  in  all  reason,  be  in  one 
and  the  same  hands.  You  cannot,  with  safety,  discriminate  between 
the  two  methods  of  transmitting  correspondence,  and  say  that  that  shall 
remain  in  the  hands  of  the  Government,  whose  prime  object  is  the  wel¬ 
fare  of  the  people,  and  this  be  delegated  to  a  private  corporation  whose 
first  and  principal  aim — naturally  and  inevitably — is  its  own  aggran¬ 
dizement. 

Not  only  in  theory,  but  in  practice  also  is  this  true.  United  in  pub¬ 
lic  or  in  private  hands,  these  two  means  will  work  together  and  harmo¬ 
niously  toward  the  same  end,  whatever  that  end  may  be.  Separated, 
they  are  competitive  and  antagonistic.  The  telegraph  in  private  charge 
is  the  rival  of  the  post-office,  and  such  a  rival  as  will,  at  no  distant  pe¬ 
riod,  utterly  defeat  the  wise  provision  of  the  Constitution  which  gave  the 
Government  complete  control  over  the  interchange  of  public  correspond¬ 
ence. 

I  am  told  that  as  yet  the  serious  effects  of  this  rivalry  have  not  been 
felt  at  the  Post-Office  Department,  and  I  suppose  that  the  entire  tele¬ 
graphic  business  of  the  country  last  year,  if  sent  by  mail  and  paid  for 
at  letter  rates,  would  probably  not  have  brought  in  a  revenue  of  over 
three-quarters  of  a  million. 

But,  Mr.  Chairman,  we  are  often  reminded,  and  I  know  that  you  all 
appreciate  the  truth  of  the  remark,  that  the  art  of  telegraphy  is  still  in 
its  infancy.  It  is  not  yet  thirty  years  since  the  first  forty  miles  of  wire 
were  erected,  and  now  we  have  130,000  miles,  representing  millions  of 
capital,  and  sending  from  fifteen  to  twenty  millions  of  messages  per 
year,  with  a  steady  annual  increase. 

We  have  scarcely  ceased  to  lament  the  death  of  the  illustrious  Morse, 
to  whose  utilization  of  one  only  of  the  properties  of  the  electric  current 
these  great  results  are  due;  but  the  time  is  not  far  distant  when  the 
achievements  of  Morse  will  be  looked  upon  as  are  now  those  of  Yolta 
and  Galvani,  and  the  host  of  scientific  men  who  have  succeeded 
.them — merely  as  steps  toward  a  greater  and  more  perfect  result.  The 
name  of  Morse  will  never  be  lost  to  the  world,  but  his  invention  will 
soon  be  superseded  by  other  and  improved  systems.  The  practical 
knowledge  of  the  men  who  operated  his  instrument  has  long  since  ren¬ 
dered  almost  useless  his  only  distinctive  claim  to  originality  in  the  re¬ 
cording  or  graphic  portion,  and  the  sounder  has  taken  the  place  Of  the 
register  at  all  important  offices. 

The  electro-magnet  itself  has  been  put  to  uses  in  connection  with  the 
telegraph  of  which  Morse  never  dreamed,  and  the  galvanometer  and 
chemical  systems  have  accomplished  results  of  which  the  magnetic  is 
incapable. 

'There  now  needs  but  the  simplification  and  cheapening  of  the  auto¬ 
graphic  system  of  Caselli,  now  in  use  between  Paris  and  Brussels, 
wrhich  scientific  talent  at  work  in  this  country  and  in  Europe  must 
inevitably  and  soon  accomplish,  and  not  only  will  the  present  telegraph 
be  thrown  aside  almost  entirely,  but  the  whole  system  ©f  communication 
at  a  distance  will  be  revolutionized  and  transmission  by  mail  in  time 
altogether  superseded. 

When  you  can  send  a  message  direct  from  Washington  to  Chicago 
without  repetition  or  the  intervention  of  repeaters  at  intermediate 
offices,  (as  any  electro-chemical  telegraph  will  admit  of  your  doing,)  you 
have  accomplished  a  great  object  not  practically  attainable  by  the  Morse 
system  under  present  conditions.  But  when  that  message,  no  matter 
what  its  length,  is  transmitted  instantaneously,  and  a  facsimile  of  your 
own  handwriting  delivered  at  the  other  end,  you  have  reached  almost 


14 


the  perfection  of  the  art.  Your  dispatch  answers  every  possible  pur¬ 
pose  of  a  letter,  with  the  greatest  possible  advantage  over  a  letter  in 
point  of  rapidity  of  transmission.  It  is  a  draft,  a  promissory  note, 
a  money-order,  a  contract,  a  receipt  ;  in  short,  all  the  business  and  official 
correspondence  of  the  country  to  which  time  is  of  importance,  but  which 
requires  the  signature  of  the  sending  party  to  make  it  valid,  will  be 
‘transacted  by  telegraph. 

When  that  time  comes,  and  come  it  must  within  the  next  thirty  years, 
even  under  the  unprogressive  management  of  the  companies,  the  Post- 
Office  will  either  become  a  mere  competitor  with  the  express  companies 
in  the  carriage  of  books,  papers,  and  other  packages  of  bulk,  or  it  will 
die  a  natural  death,  and  leave  the  control  of  our  correspondence  alto¬ 
gether  in  the  hands  of  private  monopolies. 

It  is  perhaps  a  wild  prediction,  but  I  venture  it,  that  in  less  than  fifty 
years,  if  the  telegraph  is  not  absorbed  by  the  Post-Office,  the  Post- 
Office  will  have  been  absorbed  by  the  telegraph. 

To  my  mind,  with  the  conceptions'!  have  of  what  the  telegraph  is  to 
be,  and  the  extensive  and  intimate  relations  if  is  destined  to  bear  to  every 
department  of  commercial  and  social  life,  reasons  of  future  policy  alone 
seem  sufficient  to  induce  the  assumption  of  its  control  by-  the  Govern¬ 
ment. 

There  are,  however,  other  and  more  immediate  and  pressing  reasons 
why  such  action  should  be  taken  in  the  public  interest. 

The  press  demands  a  reduction  of  tariff  for  its  news  reports,  and  re¬ 
lief  from  the  combined  monopoly  of  the  telegraph  and  the  Associated 
Press;  the  interests  of  the  Government  demand  the  entire  control  of  the 
wires  for  the  proper  transmission  of  the  weather-reports  and  other  public 
business;  and  the  interests  of  the  people  demand  the  extension  of  facil¬ 
ities,  impartiality  in  the  transmission  of  dispatches,  and  the  reduction 
of  tariffs  to  the  minimum  consistent  with  profitable  working.  None  of 
these  are  attainable  to  the  fullest  extent  except  through  a  purely  Gov¬ 
ernment  system.  , 

With  regard  to  the  first  point,  there  is  a  x>opular  error — shared  to  some 
extent  by  the  newspapers  themselves— that  press  dispatches  are  sent, 
if  not  at  a  loss  to  the  companies,  on  much  more  favorable  terms  than 
private  messages. 

As  far  as  the  individual  newspapers  are  concerned,  they  undoubtedly 
have  the  advantage  of  much  lower  rates  than  the  general  public  are 
compelled  to  pay.  But  the  question  of  whether  a  tariff  is  profitable  to 
the  companies  or  not  depends  upon  the  amount  of  business  done  under 
it,  or  in  this  case  upon  the  number  of  words  sent  daily  to  the  newspa¬ 
pers,  and  also  upon  the  number  of  papers  taking  the  same  dispatches; 
and  when  you  consider  the  aggregate  amount  of  work  performed  by  the 
companies,  (one  transmission  over  a  combination  of  circuits  frequently 
serving  from  five  to  fifteen  newspapers,)  and  the  aggregate  compensa¬ 
tion  per  word  which  they  receive  for  it,  you  will  find  that  there  is  little 
if  any  sacrifice  on  their  part  to  the  public  intelligence. 

On  this  point  I  beg  leave  to  refer  to  the  report  of  General  G.  C.  Wash¬ 
burn,  of  the  last  House,  (page  4G,  House  report  — ,  41st  Congress, 
2d  session,)  which  is  a  document  from  which  1  shall  have  frequent 
occasion  to  quote,  and  which  contains,  though  with  a  somewhat  differ¬ 
ent  arrangement,  many  of  the  arguments  which  I  shall  endeavor  to  pre¬ 
sent  to  you.  I  have  seen  no  attempt  at  refutation  of  any  of  those  argu¬ 
ments  by  the  companies.  I  think  I  may  assume,  therefore,  that  the  facts 
.  on  which  they  are  brtsed  are  admitted. 


15 


To  illustrate  the  oppressive  policy  of  the  Associated  Press  and  tele¬ 
graph  monopolies,  I  have  only  to  refer  to  their  course  toward  the  New 
York  and  San  Francisco  Heralds,  and  to  their  contract  with  the  Western 
Asssociated  Press,  the  details  of  which  are,  I  believe,  familiar  to  most  of 
you,  (jtege  104,  Washburn’s  report.) 

Mr.  Orton  has  commented  with  some  severity  on  the  Government  cen-  _ 
sorship  of  the  French  lines.  Admitting  that  to  exist,  although  it  is  indig¬ 
nantly  denied  by  the  director  general,  (page  28,  Washburn’s  report,) 
thereis  some  excuse  for  it  in  the  political  condition  of  that  country,  but 
for  this  absolute  despotism  of  the  telegraph  over  the  press  in  this  coun¬ 
try  there  is  none  whatever.  It  is  the  selfishness  of  a  great  corporation 
wielding  its  power  to  control,  for  its  own  ends,  what  should  be  the  free 
agent  of  public  opinion. 

That  such  an  evil  as  this  can  be  remedied  by  legal  restrictions  upon 
the  present  companies,  I  do  not  believe,  nor  would  it  be  by  those  pro¬ 
posed  by  Mr.  Hubbard's  bill  to  be  placed  upon  his  company.  Certainly, 
the  rates  for  press  dispatches  there  laid  down  afford  ample  margin  for 
favoritism,  and  are  no  lower  than  the  present  ones,  (section  5,  Hubbard’s 
bill.) 

Mr.  Garfield.  No  lower  than  the  present  rates? 

Mr.  Lines.  ]No  lower  than  the  present  rates  as  to  the  greater  part  of 
the  dispatches. 

Mr.  Hubbard.  I  think  you  are  mistaken.  If  you  look  at  the  bill  you 
will  see  that  our  rates  are  75  cents  for  every  hundred  words  by  night 
and  $1  by  day. 

Mr.  Lines.  Very  true;  that  is,  for  each  circuit  of  two  hundred  and 
fifty  miles,  and  for  special  dispatches.  A  little  further  down  you  say, 
(line  14,)  “The  rates  for  press  associations  shall  not  exceed  those  now 
paid  by  the  Associated  or  American  Press  for  similar  service.”  I  think 
ytu  will  admit  that  those  dispatches  comprise  nine-tenths  of  the  news 
received  by  the  press. 

Mr.  Hubbard.  I  should  not  like  to  admit  that  they  comprise  one- 
'half. 

Mr.  Lines.  Their  proportion  to  the  aggregate  number  of  words  de¬ 
livered,  for  which  you  receive  pay,  is  about  nine  tenths.  There  is  no 
reduction  for  that  service. 

I  have  said  that  the  Government  needs,  at  times,  the  entire  control 
of  the  wires  for  its  own  business.  With  the  discussion  of  the  signal- 
service  question  so  fresh  in  your  memories,  it  will  not  be  necessary  for 
me  to  enlarge  upon  this  branch  of  the  subject. 

It  was  shown  on  the  one  hand  that  the  officers  to  whom  the  making 
up  of  these  reports  is  intrusted  must  have  the  absolute  use  of  the  cir¬ 
cuits  until  they  are  all  received.  On  the  other  hand,  it  was  shown,  and 
very  clearly  to  my  mind,  that  the  surrendering  of  the  same  circuits, 
day  after  day,  and  at  certain  fixed  hours  of  the  day,  to  officers  of  the 
Government  who  cannot  be  familiar  with  the  hourly  changing  necessi¬ 
ties  of  the  ordinary  business  of  the  companies,  must  often  be  product¬ 
ive  of  very  great  inconvenience  and  delay.  The  last  wire  between 
important  points  will  sometimes  be  taken,  and  the  plans  of  the  compa¬ 
nies’  chief  operators  for  the  arrangement  of  their  circuits  seriously 
interfered  w  ith. 

If  the  companies  could  do  the  business  in  their  own  way,  which,  of 
course,  they  cannot,  or  if  the  Government  had  the  entire  management 
of  the  lines,  these  difficulties  could  be  avoided  ;  but  under  the  joint  au¬ 
thority  of  the  Government  and  any  telegraph  company  whatever,  no 
matter  how  well  disposed  it  may  be,  they  are  inevitable. 


16 


Again,  in  times  of  war  or  of  rebellion,  tbe  possession  of  the  telegraph 
would  be  of  inestimable  value ;  in  fact,  it  would  be  a  necessity  to  the 
Government,  and  yet,  as  the  case  stands  at  present,  congressional  ac¬ 
tion  would  have  to  be  procured,  and  much  precious  time  would  be  lost 
before  the  proper  measures  for  the  transfer  could  be  effected ;  while 
with  a  Government  system  the  necessary  precautions  could  be  taken  at 
once. 

Clearly,  the  interests  of  the  Government,  if  they  can,  for  the  sake  of 
argument,  be  for  a  moment  dissociated  from  those  of  the  i>eople,  de¬ 
mand  the  adoption  of  a  purely  governmental  system. 

The  first  point  to  which  1  have  alluded  as  being  comprised  in  the 
wants  of  the  people  at  large  is  t^eir  demand  for  greater  telegraphic 
facilities,  and  by  this  I  mean  not  only  the  increase  of  facilities  between 
offices  already  established,  (which  could,  perhaps,  be  doubled  without 
the  erection  of  another  wire,  by  re-insulation  and  consolidation  of  the 
present  lines  under  one  management,)  but  also  the  extension  of  the 
wires  to  all  parts  of  the  country,  making  the  telegraph  eventually  co¬ 
extensive  with  the  post-office. 

Neither  of  these  results  can,  in  my  opinion,  be  attained  for  many 
years,  whether  the  present  system  be  retained  or  one  similar  to  that 
proposed  by  Mr.  Hubbard  adopted. 

As  long  as  the  present  state  of  things  continues,  the  opposition  com¬ 
panies,  hoping  to  cdhie  in  under  Mr.  Hubbard’s  bill,  (and  I  must  say 
that  it  is  a  very  high  proof  of  that  gentleman’s  energy  and  talent  that 
he  has  succeeded  in  inspiring  and  so  long  sustaining  such  a  hope,)  will 
not  sell  their  lines  to  the  Western  Union  Company  at  the  ruinous  prices 
which  the  latter  are  in  the  habit  of  paying  for  unproductive  property, 
(see  Washburn’s  report,  p.  123,)  but  will  go  on  doing  their  own  business 
at  a  loss,  and,  according  to  Mr.  Orton,  u  dividing  the  receipts,  and 
more  than  doubling  the  expenses”  of  the  whole  telegraph  service. 

On  the  other  hand,  supposing  Mr.  Hubbard’s  bill  to  pass — if  we  are 
to  judge  from  the  utterances  of  the  president  of  the  Western  Union 
Company — the  new  combination,  notwithstanding  its  connection  with 
the  Government,  will  have,  for  a  long  time,  certainly,  (if  it  lives  a  long 
time,)  to  fight  the  Western  Uuion  Company  with  its  more  extended 
lines,  greater  capital,  and  the  prestige  of  an  established  business. 

The  immense  gain,  therefore,  in  facility  and  economy  of  administra¬ 
tion  which  would  result  from  the  consolidation  of  existing  lines,  is  not  a 
near  prospect,  except  through  the  adoption  of  a  Government  monopoly. 

In  the  second  place,  with  respect  to  the  extension  of  lines  to  points 
not  yet  reached,  I  think  I  may  safely  assume  that  the  present  com¬ 
panies  will,  as  heretofore,  establish  no  non-paying  offices,  except  for 
testing  or  repeating  purposes;  for,  while  the  ultimate  benefit  from  the 
building  up  of  a  business  is  readily  apparent,  stockholders  cannot  afford 
to  wait  for  their  dividends  long  enough  to  enable  the  companies  to 
make  such  extensions  as  the  interests  of  the  people  really  require. 

Again,  let  the  plan  of  Mr.  Hubbard’s  bill  be  adopted,  and  the  only  prom¬ 
ise  we  have  from  him  is  that  u  as  soon  as  practicable”  (which  is  a  phrase 
susceptible  of  somewhat  liberal  construction)  the  system  of  telegraphs 
shall  be  extended  to  all  places  within  ten  miles  of  a  telegraph  circuit  when 
the  receipts  of  the  post-office  are  over  $500  per  annum.  (Hubbard’s  bill, 
line  7.)  To  show  how  much  of  an  extension  this  would  be,  I  beg  leave 
to  call  attention  to  some  figures  derived  from  official  sources.  There 
are  now  some  32,000  post-offices  in  the  United  States,  at  5,607  of  which 
there  are  telegraph  offices.  At  556  of  these  the  receipts  are  over  $3,000 ; 


17 


at  772  the  receipts  are  more  than  $1,000  and  less  than  $3,000;  at  810 
they  are  between  $500  and  $1,000 ;  and  at  3,469  they  are  less  than 
$500.  At  only  825  offices,  where  the  receipts  are  over  $500,  are  there 
no  telegraph  offices,  and  probably  one-half  of  these  are  more  than  ten 
miles  from  any  existing  telegraph  circuit.  This  is  certainly  an  insig¬ 
nificant  number  compared  with  the  3,441  telegraph  offices  at  points 
where  there  are  no  post-offices,  and  for  which  Mr.  Hubbard’s  bill  makes 
no  provision. 

In  regard  to  impartiality  in  the  transmission  of  dispatches  I  need 
only  refer  you  to  the  allusions  to  that  subject  in  Mr.  Washburn’s  report, 

(p.  10.) 

The  establishment  of  the  Commercial  News  Bureau  and  the  priority 
given  to  its  messages  over  the  lines  of  the  Western  Union  Company 
are,  in  the  first  place,  a  violation  of  the  general  law  under  which  that 
company  was  organized,  which  says,  (Laws  of  New  York,  1848,  chapter 
265:)  the  said  telegraph  companies  “shall  transmit  messages  with  im¬ 
partiality  and  good  faith,  under  penalty  of  $500 and  it  shall  also  be 
their  duty  “  to  transmit  all  dispatches  in  the  order  in  which  they  are 
received,  under  a  like  penalty  of  $500.” 

This  bureau  is  next  a  usurpation  of  the  functions  of  the  press,  and 
an  overstepping  of  the  legitimate  province  of  the  company  as  a  common 
carrier  only  of  news. 

Lastly,  it  is  a  gross  infringement  on  the  rights,  first,  of  merchants 
whose  private  dispatches  as  to  the  state  of  the  markets,  although 
through  the  energy  of  their  correspondents  filed  in  the  sending  office 
earlier  than  those  of  the  commercial  news  department,  are  yet  postponed 
to  the  latter ;  secondly,  oppdsition  bureaus,  such  as  Davis’s,  whose  dis¬ 
patches  were  sent  in  a  roundabout  way  to  delay  them  ;  and,  thirdly,  the 
senders  of  messages  not  pertaining  to  the  markets,  who  have  as  good  a 
right  to  their  turn  as  any  others. 

That  is  the  present  system.  Under  Mr.  Hubbard’s  bill,  Mr.  Orton  has 
shown  that  the  clause  providing  for  registered  messages  to  have  priority 
would  be  seized  upon  at  once  by  the  mercantile  community,  to  whom 
the  reduction  of  tariff  would  offer  very  little  inducement  to  use  the  tel¬ 
egraph  more  than  they  do  now,  and  the  prime  object  of  the  reduction, 
viz,  the  popularization  of  the  telegraph  and  its  use  as  a  means  of  social 
intercourse,  would  be  defeated. 

It  has  somewhere  been  stated  that  the  percentage  of  telegrams  of  a 
social  nature  to  the  whole  number  of  dispatches  is  from  five  to  ten  times 
as  great  in  European  countries  as  here.  The  last  Swiss  report,  I  believe, 
places  the  proportion  in  that  country  at  over  sixty  per  cent.,  while  in  the 
United  States  it  is  estimated  to  be  less  than  ten.  With  the  proper  facil¬ 
ities  in  this  country  for  social  business,  these  proportions  ought  to  be 
reversed;  for  certainly  no  people  in  the  world  have  such  widely  extended 
internal  intercourse,  under  unfavorable  circumstances  as  to  slowness  of 
mail  communication. 

While  it  makes  but  little  difference  to  a  merchant,  whose  transactions 
involve  hundreds  of  thousands  of  dollars,  whether  his  message  costs 
fifty  cents  or  a  dollar,  to  the  poor  man,  or  to  the  man  whose  convenience 
only  is  in  question,  it  is  of  great  importance,  and  in  a  thousand  cases, 
when  speed  of  communication  is  desirable,  the  consideration  of  cost 
steps  in  and  finally  decides  him  to  use  the  mail. 

Our  largest  increase  of  business  under  a  bona-fide  reduction  of  tariff 
would  undoubtedly  be  of  a  social  character. 

Now,  it  may  be  said  that  if  the  social  message  is  of  importance  the 
sender  will  pay  the  registered  price,  and,  if  not,  he  will  be  willing  to  let 
2  T 


18 


it  wait  until  commercial  business  is  over.  To  this  I  oppose  the  argu¬ 
ment  that  the  very  knowledge  that  his  message  is  to  wait  indefinitely, 
nutil  the  hooks  are  cleared  of  dispatches  of  a  more  favored  class,  because 
paid  for  at  a  double  rate,  which  is  higher  than  even  the  present  rates 
(Washburn’s  report,  p.  152,)  would  tend  rather  to  prejudice  the  sender 
against  the  new  system  than  to  induce  him  to  take  advantage  of  the 
low  tariff  for  social  messages.  The  bill  should  therefore  fairly  be  called 
u  a  bill  to  increase  the  rates  of  correspondence  by  telegraph.” 

The  third,  and  perhaps  the  most  important,  pressing  public  want  in 
connection  with  the  telegraph  is  a  cheap  and,  as  far  as  may  b.e,  a  uni¬ 
form  tariff.  On  this  point  I  do  not  propose  to  go  into  a  lengthy  com¬ 
parison  of  American  with  European  rates,  or  to  lead  you  through  the 
mazes  of  European  statistics,  of  which  there  are  no  reliable  American 
counterparts.  So  far  as  they  can  be  shown,  the  relative  extent  and  cheap¬ 
ness  of  telegraphic  facilities  in  this  country  and  in  Europe  are  shown 
in  the  report  of  General  Washburn’s  committee  and  the  official  tables 
presented  by  Mr.  Hubbard.  The  latest  statistics  for  w  hich  I  have  sent 
abroad  have  not  yet  been  received. 

I  assume,  liowrever,  that  there  are  circumstances  in  the  enterprising 
character  of  our  people,  in  the  freer  spirit  of  our  internal  commercial 
relations,  the  uniformity  of  our  language,  and  the  less  frequency  and 
celerity  of  our  mail  communications,  that  lead  to  a  much  greater  use  of 
the  telegraph,  and  would  permit  of  a  lower  comparative  tariff  here  than 
the  average  rate — internal,  international,  and  transit — throughout  a 
section  in  Europe  of  equivalent  area  to  the  United  States. 

The  following  table  will  serve  to  illustrate  this  point: 

The  area  of  the  United  States  is  a  little  over  three  millions  of  square 
miles,  which  is  equal  to  that  of  all  the  countries  of  Europe,  less  Turkey 
and  one-third  of  Kussia.  The  number  of  dispatches  sent  in  that  area 
during  the  year  1868  was  27,549,434  ;  the  receipts,  $12,837,082  ;  average 
receipt  per  message,  about  47  cents.  Of  course  the  rates  have  been 
largely  reduced  since  1868,  especially  in  England,  where  the  telegraph 
is  more  freely  used  than  in  any  other  country. 

Now,  according  to  the  best  authorities,  the  average  price  of  living  in 
those  countries,  which  affords  the  broadest  basis  for  calculation,  is  about 
three-fourths  of  that  in  the  United  States. 

It  must  be  remembered,  however,  that  the  cost  of  building  lines  in 
Europe  is  comparatively  greater,  on  account  of  their  superior  quality  ; 
and,  if  Mr.  Orton’s  figures  are  correct,  (Washburn’s  report,  pages  129, 
note  t,  and  137,  note  *)  the  cost  of  operating  them  is  also  greater;  and 
these  considerations,  added  to  those  above  mentioned,  would  certainly 
authorize  an  average  tariff,  under  Government  management,  of  50 
cents  in  this  country. 

Or,  take  another  view,  and  without  any  reliable  statistics  from  the 
American  companies  as  to  their  average  tariff,  w7e  can  yet  see  how  and 
to  what  extent  that  tariff  can  be  reduced  below  the  lowest  point  which 
can  be  reached  by  private  companies. 

Take  the  Western  Union  figures  given  you  some  days  ago  by 
Mr.  Orton — gross  receipts  for  1871,  $7,923,566.02 ;  gross  expenses, 
$5,327,402.37. 

It  is  admitted  that  by  the  consolidation  of  all  the  lines  under  one 
management,  the  total  expenses  of  the  opposition  offices,  which  furuish 
no  greater  facilities  than  the  Western  Union,  could  be  saved,  and  their 
entire  receipts  ($1,000,000,  according  to  Mr.  Hubbard)  placed  to  the 
profit  account  of  the  latter  company.  (Washburn’s  report,  pp.  93  and 
149.)  The  receipts  of  the  consolidated  system  would  then  stand  at 


19 


$8,923,506.02,  arid  the  expenses  as  now,  or  say,  in  round  numbers,  re¬ 
ceipts,  $9,000,000;  expenses,  $5,400,000. 

Now,  when  this  consolidation  is  accomplished,  a  great  saving  still  re¬ 
mains  to  be  effected  by  uniting  the  greater  number  of  these  offices  with 
the  post-offices.  To  determine  exactly  to  what  offices  this  further  con¬ 
solidation  could  be  applied  would  require  a  careful  consideration  of  the 
number  of  wires  passing  through  each, and  their  relative  importance  on 
the  circuits,  which  I  have  not  had  time  to  go.  into.  I  am  not  so  san¬ 
guine  as  Mr.  Hubbard  as  to  the  saving  in  large  cities,  and  I  think  that 
by  the  time  .the  new  post-office  in  New  York  is  ready  for  occupancy  it 
will  not  be  found  too  large  for  the  postal  service,  and  the  Government 
will  need  the  Astor  House  for  telegraph  headquarters. 

However,  it  will  be  very  far  within  bounds  to  say  that  arrangements 
can  be  made  at  all  post-offices  where  the  receipts  are  less  than  $3,000, 
for  the  accommodation,  without  extra  expense,  of  the  telegraph.  I  need 
instance  only  such  towns  as  Ravenna,  Ohio ;  Los  Angeles,  California  ; 
Muscatine,  Iowa;  Geneva,  New  York  ;  Lancaster,  Pennsylvania;  War¬ 
saw,  Indiana;  Ellsworth,  Maine;  and  Frederick,  Maryland,  the  receipts 
of  the  majority  of  which  are  over  $3,000.  This  class  of  post-offices, 
where  the  receipts  are  less  than  $3,000,  and  at  which  there  are  now 
telegraph  offices,  numbers  some  5,151.  The  rent  of  the  telegraph  offices, 
at  the  very  low  average  of  $100  per  year,  (Washburn’s  report,  p.  153,) 
would  reach  say  $500,000,  which,  deducted  from  the  working  expenses, 
would  leave  $4,900,000.  I  make  no  account  of  the  number  of  larger 
offices,  wherein  accommodations  could  be  provided  for  the  telegraph  at 
a  very  slight  cost,  preferring  to  deal  only  with  those  where  I  believe 
the  rent  of  offices  could  be  entirely  saved. 

Again,  by  combining  the  duties. of  postmaster  and  telegraph  operator 
at  all  points  where  the  postal  receipts  are  less  than  $1,000  per  annum, 
(numbering  4,279,)  one-third,  at  least,  of  the  average  salary  of  the  oper¬ 
ator  can  be  saved.  Supposing  that  salary  to  be  $450  per  annum,  which 
is  about  the  lowest  paid  by  the  companies,  the  reduction  expense  would 
be  $650,000,  leaving  the  working  expenses  $4,250,000. 

By  this  course,  as  you  will  readily  see,  the  operator  would  get  a  bet¬ 
ter  salary,  hence  you  would  have  a  better  operator;  the  postmaster 
would  receive  more  pay,  and  you  would  get  a  better  postmaster;  and  yet 
by  combining  the  duties  in  one  and  the  same  person,  the  Government 
would  save  money  over  the  present  rates  on  both  accounts.  I  do  not 
mention  the  saving  in  the  larger  offices  from  the  operation  of  the  tele¬ 
graph  by  the  clerks  of  the  postal  department,  where  the  postmaster 
himself  is  unable  to  attend  to  it.  Nor  have  I  taken  into  account  any 
saving  from  the  non-employment  of  book-keepers,  &c.,  with  whom  Mr. 
Hubbard  proposes  to  dispense,  although  his  bill  provides  for  a  system 
of  reports  from  the  head  of  the  Bureau,  for  which  the  data  must  come 
from  the  books  of  the  separate  offices. 

By  taking  pay  for  $500,000  worth  of  dead  head  messages,  now  sent 
under  private  frank,  the  receipts  would  be  increased  to  $9,500,000. 

Now,  there  is  a  legitimate  profit  of  $5,250,000  at  the  present  rates  of 
tariff.  To  what  should  it  be  applied?  First,  to  the  payment  of  inter¬ 
est  on  the  purchase-money ;  next,  to  the  extension  of  facilities ;  and 
next,  to  a  reduction  of  tariff. 

I  must  now  assume,  what  I  hope  to  be  able  to  establish,  that  the  Gov¬ 
ernment  can  procure  the  lines  of  the  companies  by  the  simple  enforce¬ 
ment  of  an  existing  contract,  and  reconstruct  them  thoroughly  at  a  cost 
of  not  ‘more  than  $12,000,000.  Five  per  cent,  on  this  cost  would  be 
$600,000. 


20 


Letting  the  increase  of  business  on  the  present  routes  take  care  of 
the  increase  of  facilities  on  the  present  routes,  and  we  shall  have  to 
provide  for  the  extension  of  the  lines  to  new  offices  only.  Five  per 
cent,  additional  on  the  cost  will  allow  us  to  build  five  thousand  miles 
of  line  annually  on  new  poles.  I  have  some  statistics  in  course  of  pre¬ 
paration,  tending  to  show  how  long  it  will  take,  by  a  judicious  arrange¬ 
ment,  to  reach  all  the  post-offices  in  the  country,  but  the  complicated 
nature  of  the  calculations  prevents  my  producing  them  here.  I  shall 
ask  the  privilege  of  filing  them  with  the  committee  hereafter.  However, 
this  increase  is  considerably  greater  than  the  annual  average  of  the 
companies. 

Adding  these  amounts  together  anti  deducting  the  sum  ($1,200,000) 
from  the  net  profits  as  above,  we  have  (for  the  first  year  after  the  recon¬ 
struction)  $4,050,000,  or  45  per  cent,  of  the  total  receipts  to  be  applied 
to  a  reduction  of  tariff. 

The  lowest  average  rate  claimed  by  the  Western  Union  Company  is 
about  50  cents;  the  highest  with  which  Mr.  Hubbard  charges  them  is, I 
believe,  64  cents.  (Washburn’s  report,  p.  145.)  Taking  the  latter 
amount  and  reducing  it  45  per  cent.,  the  average  rate  for  a  Government 
system  would  be  35  cents. 

Now,  this  is  evidently  too  high  a  tariff  to  be  made  uniform,  and  the 
question  as  to  how  the  different  rates  should  be  proportioned  is  one  that  I 
think  must  be  left  open  for  a  while.  It  certainly  should  not  be  hastily 
decided  by  legislation  without  a  careful  study  of  the  check  reports  and 
other  statistics  of  the  present  companies  as  to  the  established  course  of 
business.  In  fact,  no  reduction  at  all  should  be  made  until  the  lines 
have  been  in  the  possession  of  the  Government  for  at  least  a  year,  and 
all  the  conditions  to  which  I  have  alluded  as  authorizing  the  reduction 
are  fully  attained.  The  wires  of  the  companies  are  in  no  better  condi¬ 
tion  to-day  than  they  were  when  examined  by  Mr.  Varley,  to  w  hom 
reference  is  made  in  Mr.  Washburn’s  report,  (pp.  42  and  154.) 

Mr.  Prescott.  Where  do  you  get  that  information  % 

Mr.  Lines.  From  my  own  observation  and  from  the  telegraphers 
themselves.  You  have  in  some  places,  between  here  and  New  York, 
twenty -four  wires  on  a  pole,  and  in  wet  weather  the  cross-currents  are  # 
such  that  you  cannot  work  more  than  five.  Any  experienced  operator 
will  tell  the  committee  that  it  would  be  madness  to  make  a  great  and 
sudden  reduction  of  the  tariff  at  present. 

What  Mr.  Hubbard’s  rates  will  be,  when  finally  fixed,  I  do  not  know. 

I  am  glad  to  see,  however,  that  he  has  taken  counsel  of  the  fears  of 
Mr.  Beck,  and  raised  them  within  the  last  few  days  so  that  his  wires 
would  not  be  so  much  crowded.  However,  as  long  as  registered  mes¬ 
sages  held  out,  he  could  keep  the  others  back — say  for  Sundays. 

Mr.  Chairman,  there  is  no  necessity  for  taking  any  other  than  a  purely 
business  view  of  this  subject.  The  Government  can  do  the  business 
better  and  cheaper  than  any  private  company,  and  make  a  profit.  I  do 
not  advocate  the  undertaking  of  anything  by  the  Government  which 
cannot  be  safely  attempted  by  a  well-organized  and  well-directed  private 
monopoly,  possessing  the  same  facilities  and  desiring  the  same  public 
end — although  I  should  think  the  money  well  expended  were  every 
cent  of  the  cost  of  operating  the  telegraph  to  be  raised  by  a  tax  as 
general  and  direct  as  a  tax  for  educational  or  for  any  other  admitted 
public  purpose.  • 

Should  the  average  rate  of  a  Government  telegram  be  fixed  by  law, 
it  should  be  placed  sufficiently  high  for  the  first  year,  and  the  discretion 
left  with  the  Postmaster  General  to  regulate  the  rates  within  certain 


21 


limits,  according  to  the  course  of  business  as  shown  by  the  books  of  the 
companies. 

In  the  time  I  have  I  cannot  pretend  to  elaborate  any  scheme,  or  do 
more  than  make  a  few  suggestions.  Perfect  justice  would  require  a  sepa¬ 
rate  calculation  for  each  separate  message.  The  greatest  convenience 
to  the  public  would  require  a  uniform  tariff  like  that  for  letters.  A 
compromise  between  the  two  might  be  effected  by  a  form  of  tariff  simi¬ 
lar  to  that  proposed  by  Mr.  Hubbard,  which  I  would  base  upon  air-line 
distances,  and  give  complete  publicity  to  by  posting  up  everywhere 
maps  laid  off  in  concentric  circles,  the  center  being  the  point  from 
which  the  tariff  is  calculated. 

Having  given,  not  I  hope  at  too  great  length,  the  principal  reasons 
for  Government  assumption  of  the  telegraph,  and  having,  I  trust,  de¬ 
monstrated  that,  with  the  good  management  we  have  every  right  to 
expect  from  the  men  of  scientific  and  technical  ability  and  experience 
who  alone  could  by  possibility  be  intrusted  with  the  care  of  the  system, 
these  requirements  would  be  met,  and  the  system  would  be  a  success,  I 
now  propose,  with  your  permission,  to  answer  some  of  the  objections 
urged  against  the  project. 

The  most  prominent  are,  the  large  amount  of  money  which  it  is  sup¬ 
posed  will  be  required  to  make  the  purchase;  the  terrible  addition  to 
Government  patronage  which  it  would  involve;  and  the  inefficiency  with 
which  the  service  would  be  performed  were  the  employes  to  receive 
their  appointments  from  the  Government'  instead  of  from  the  com¬ 
panies. 

On  these  points  I  have  noticed,  wherever  the  question  has  been  dis¬ 
cussed,  that  the  imagination  usually  gets  control  of  those  whose  inter¬ 
ests  are  affected,  and  the  result  is  speculation  of  the  vaguest  and  wildest 
kind ;  figures  actually  run  crazy,  and  the  number  of  millions  of  dollars 
and  thousands  of  employes  that  will  be  added  to  the  burdens  of  the 
country  seems  to  depend  altogether  upon  the  exuberant  fancy  of  the 
party  making  the  estimate. 

Now,  of  course,  whether  the  Government  pays  five  millions  for  the 
telegraph  lines  or  fifty,  the  amount  will  not  be  appropriated  from  moneys 
in  the  Treasury.  No  loan  that  could  be  placed  on  the  home  market, 
through  the  national  banks,  for  instance,  would  have  greater  popularity 
than  a  loan  for  the  acquisition  of  the  telegraphs,  whether  its  amount  be 
large  or  small. 

I  do  not  think  there  is  any  difficulty  in  computing  the  amount  nearly 
enough  to  report  a  bill  at  this  session,  if  it  were  expedient  (which  it 
certainly  is  not)  to  take  such  early  action.  But,  if  the  committee  are  in 
doubt,  I  submit  that  there  is  a  very  simple  way  to  settle  the  question  of 
price,  and  that  is  to  suggest  to  the  Postmaster  General  that  he  appoint 
his  appraisers  under  the  act  of  1866,  which  would  not  at  all  commit  the 
Government,  and  inform  the  committee  of  the  result  of  their  appraisal. 
If  the  amount  is  considered  too  large  to  add  to  the  debt  of  the  country, 
adopt  Mr.  Hubbard’s  plan,  or  let  the  matter  drop ;  if  not,  the  companies 
are  bound  to  sell  at  the  price  fixed  by  the  appraisers.  In  fact,  as  the 
United  States  is  the  legal  reversioner  of  this  property,  both  under  Mr. 
Hubbard’s  bill  (section  13)  and  the  present  system,  it  is  certainly  im¬ 
portant,  before  taking  any  action  which  may  commit  you  to  a  particular 
valuation,  in  behalf  even  of  a  private  corporation,  to  ascertain  what  the 
property  is  really  worth. 

There  is  one  point  raised  by  the  Western  Union  Company,  and  sus¬ 
tained  by  Mr.  Hubbard,  as  to  the  basis  of  appraisal,  whidi  contains  the 
whole  of  the  position  of  the  companies  on  the  question  of  a  Government 
telegraph,  and  which  must  be  settled  before  even  preliminary  action  is 


22 


taken.  If  the  Western  Union  Company  is  allowed,  in  this  case  also,  to 
make  a  contract  as  a  party,  and  then  construe  it  as  a  judge,  there  is  not 
much  use  in  trying  to  control  it.  We  had  better  give  up,  thankful  if 
the  companies  do  not  compel  us,  under  their  construction  of  the  act  of 
1866,  to  take  their  property  nolens  nolens,  and  at  their  own  valuation. 

To  show  the  different  views  of  the  Western  Union  and  the  proposed 
new  combination  on  this  subject,  I  beg  leave  to  read  a  few  extracts  from 
the  report  of  the  select  committee.  On  page  115  we  find  the  following: 

Mr.  Washburn.  The  idea  before  this  committee  is,  that  the  Government  should  buy 
existing  lines;  consequently  it  is  a  matter  of  some  importance  for  the  committee  and 
for  Congress" to  know  how  large  an  expenditure  the  Government  would  have  to  incur 
should  it  decide  to  carry  out  that  project. 

Mr.  Orton.  In  that  connection  I  will  say  that,  while  we  have  accepted  the  provisions 
of  the  law  of  1866,  and  therefore  are  estopped  from  making  any  objection  to  the  pur¬ 
chase  of  the  lines  by  the  Government,  further  than  such  criticisms  as  every  citizen  has 
a  right  to  make,  we.  do  not.  propose  to  be  a  party  to  a  sale  of  our  lines  upon  a  basis 
which  estimates  the  value  of  our  property  simply  by  so  many  thousand  poles  and  so 
many  tous  of  wire.  I  do  not  admit  that  the  cost  of  our  lines  or  the  value  of  our  prop¬ 
erty  is  a  proper  subject  of  investigation  by  this  committee.  Whenever  Congress  de¬ 
cides  to  purchase,  we  are  entitled  to  select  half  the  jury  which  is  to  decide  the  question, 
of  value.  When  that  time  arrives  we  shall  claim  that  all  our  facilities,  contracts,  and 
franchises,  as  well  as  our  poles,  wire,  and  apparatus,  shall  be  treated  as  property,  and 
valued  with  reference  to  their  united  capacity  to  earn  money.  The  question  of  cost 
need  not  be  raised  at  all.  If  you  were  going  to  buy  us  out  on  the  basis  of  so  many 
miles  of  poles  and  of  wire,  would  you  give  no  higher  price  for  a  line  doing  a  large 
business,  and  making  a  heavy  profit,  than  for  another  working  at  a  loss,  and  bank¬ 
rupting  its  owners  ?  ’ 

Again,  on  page  119 : 

Mr.  Washburn.  What  do  you  mean  by  the  “cash  value”  of  your  property  ? 

Mr.  Orton.  I  mean  the  value  to  be  ascertained  precisely  on  the  basis  we  were  dis¬ 
cussing — not  merely  the  cost  of  so  many  poles  and  so  many  miles  of  wire,  but  what 
this  property  is  worth,  in  its  present  condition,  as  a  means  for  conducting  a  business. 

Mr.  Washburn.  As  a  means  for  earning  money  ? 

Mr.  Orton.  Yes,  sir;  for  making  fair,  legitimate,  reasonable  profits. 

Mr.  Washburn.  That  is,  if  it  earns  you  profits  on  '$50,000,000,  and  the  Government 
will  guarantee  you  10  per  cent,  on  $50,000,000,  you  are  satisfied  on  that  principle? 

Mr.  Orton.  Yes,  sir  ;  but  why  make  your  supposition  so  extravagant  and  impossible ; 
why  not  come  down  to  the  domain  of  xwobabilities  ? 

On  page  138 : 

Mr.  Washburn.  Would  you  be  willing  to  take  the  value  of  your  stock  in  the  stock 
market  as  a  basis? 

Mr.  Orton.  I  Avould  not.  The  quotations  of  the  stock  market  seldom  give  the  true 
value  of  the  property  of  any  corporation.  The  present  price  of  our  stock  in  the  market 
is  about  33 — the  par  value  being  100.  I  hold  a  little,  however,  for  which  I  paid,  more 
than  three  years  ago,  58.  Since  that  time  we  have  expended,  in  enlarging  and  im¬ 
proving  our  property,  more  than  three  millions  of  dollars  in  cash,  taken  from  current 
earnings.  Intrinsically,  therefore,  our  property  is  worth  three  millions  more  when  its 
stock  is  selling  at  33  than  when  it  sold  at  58.  It  is  probable  that  had  we  divided  the 
three  millions  among  our  stockholders,  the  price  of  the  stock  would  be  much  higher  to¬ 
day  than  it  is,  although  it  would  be  actually  worth  considerably  less.  You  will  see  by 
(this  illustration  how  unjust  it  would  be  to  ask  our  stockholders,  a  majority  of  whom 
have  paid  very  much  more  for  their  stock  than  it  will  now  bring  in  the  market,  to 
abandon  all  expectation  of  ever  getting  their  investment  returned  in  full,  as  well  as 
all  hope  of  any  future  profit. 

And  on  page  148  are  Mr.  Hubbard’s  views  in  full. 

You  will  say,  I  think,  that  all  that  is  indefinite  enough,  but  it  gives 
us  a  vague  conception  of  the  very  large  claims  that  may  at  some  future 
time.be  made  upon  the  Government,  when  the  necessities  of  the  people 
have  driven  it  to  the  purchase  of  the  telegraphs.’ 

Mr.  Orton  says,  in  one  place,  that  the  cost  of  his  lines  has  nothing  to 
do  with  the  price  the  Government  should  pay ;  in  another,  that  he  would 
not  be  willing  to  take  the  market  value  of  his  stock  as  a  basis  of  sale, 
(though,  since  the  stock  has  gone  up  from  thirty-three  tp  nearly  seventy- 


23 


five  cents  on  the  dollar,  be  bas,  perhaps,  changed  bis  mind  on  that  point ;) 
and  yet,  again,  be  says  that  the  Government  shall  go  into  the  question 
of  cost,  and  value  the  stock  and  franchises,  as  well  as  the  poles  and  wires 
of  bis  company,  u  with  respect  to  their  united  capacity  to  earn  money.77 

Now,  if  there  were  a  competing  company,  with  all  the  facilities  of  the 
Western  Union,  there  would  be  no  difficulty  at  all,  for  neither  company 
would  ever  let  the  other  earn  more  than  10  per  cent,  on  its  bona-fide 
capital,  and  the  “productive  value77  of  the  property  would  be  just  equal 
to  the  capital  invested.  The  excess  now  is  due  to  the  monopoly,  for 
which  it  is  proposed  to  charge  the  Government. 

There  is  to  be  no  compensation,  however,  for  this  excessive  valuation 
of  Western  Union  property.  The  opposition  companies,  though  losing 
money,  are  not  prepared  to  pay  the  Government  for  relieving  them  of 
their  lines.  On  the  contrary,  Mr.  Hubbard,  while  he  agrees  to  the  pro¬ 
ductive  value  of  the  Western  Union  Company’s  property,  proposes,  in 
reference  to  the  ir  c  s  which  have  proved  such  a  bad  investment,  anotner 
basis  of  apprai  sr  1. equally  vague,  but  probably  equally  remunerative  to 
the  companies  he  represents. 

Mr.  Hubbard.  I  do  hot  represent  those  companies. 

Mr.  Lines.  I  beg  your  pardon  if  I  have  misstated  your  position.*  I  will 
modify  my  statement,  and  say  that  those  companies  are  probably  inter¬ 
ested  in  your  representations. 

This  mode,  says  Mr.  Hubbard,  with  what  authority,  except  as  to  one 
company,  I  am  unable  to  discover,  was  the  just  and  discriminating 
course  pursued  by  the  English  government.  As  we  are  discussing  the 
present  or  remote  propriety  of  following  the  example  of  the  English 
government  in  the  acquisition  of  the  lines,  I  desire,  with  the  permission 
of  the  committee,  to  review  briefly  and  compare  the  relations  between 
the  government  and  the  telegraph  in  Great  Britain  and  in  this  country. 

The  British  government  has  always  exercised  the  right  of  eminent  do¬ 
main  over  the  telegraphs  in  acts  incorporating  and  from  time  to  time  reg¬ 
ulating  the  different  companies  which  formerly  existed.  I  have  not  yet 
received  copies  of  the  acts  of  incorporation,  which  are  not  published  in 
the  general  statutes,  but  I  think  I  may  safely  say  that  from  the  time  the 
telegraph  was  first  introduced  in  England,  as  a  part  of  the  railway  sys¬ 
tem,  there  has  not  been  a  single  subsidy  granted  except  to  a  foreign 
cable  company.  Government  priority  and  other  control  has  always 
been  exacted  as  a  matter  of  right,  and  attached  to  every  grant  of  in¬ 
corporation. 

The  idea  that  a  charter  of  incorporation  is  of  itself  of  no  value,  with¬ 
out  the  addition  of  special  privileges,  has  not  prevailed  over  there.  Qn 
the  contrary,  we  find  such  acts  as  the  26  and  27  Yictoria,  chapter  112,  im¬ 
posing  numerous  and  severe  restrictions  on  the  power  of  the  companies 
as  against  private  rights — regulations  as  to  the  immediate  transmission 
of  Government  messages  and  the  compulsory  erection  of  such  lines  as 
the  Government  might  deem  necessary,  and  provisions  for  their  assump¬ 
tion  by  the  Grown  in  case  of  emergency ;  all  this  without  corresponding 
concessions  to  the  companies  of  any  kind. 

When  the  telegraph  act  of  1868  was  passed,  therefore,  and  the  post¬ 
master  general  was  authorized  to  take  bodily  possession  u  of  the  whole 
or  such  parts  as  he  shall  think  fit  of  the  undertaking  of  any  telegraph 
company,77  it  would  not  have  been  surprising  if  this  principle  of  “  con¬ 
sequential  damages77  had  found  a  recognition. 

The  companies  were  under  no  obligation  to  the  government  except 
for  their  bare  existence,  and  the  seizure  was  as  arbitrary  in  spirit,  so 

*  See  Washburn’s  report,  page  9*2,  extract  near  close  of  this  argument. 


24 


far  as  previous  consent  of  the  companies  was  concerned,  as  could  well 
he  imagined. 

In  the  final  debate  on  the  bill  (see  Hansard’s  Parliamentary  Reports, 
vol.  193,  p.  1598)  great  stress  was  laid  on  this  point  as  influencing  the 
course  of  the  government  in  its  avowedly  liberal  agreement. 

The  chancellor  of  the  exchequer  said : 

As  regarded  what  had  been  said  about  the  extravagance  of  the  price,  he  hoped  the 
committee  (of  the  whole)  would  bear  in  mind  that  the  transaction  was  one  in  the 
nature  of  a  compulsory  purchase.  *  *  *  He  had  never  asserted  that  the  terms 

whi«h  the  government  had  agreed  to  werfe  not  liberal ;  what  he  had  asserted  was  that 
they  were  not  too  liberal.  *  *  *  As  to  the  comparison  that  had  been  made 

between  the  price  in  this  case,  and  that  provided  in  the  case  of  the  railways,  by  the 
act  of  1844,  the  committee  would  remember  that  under  the  provisions  of  that  act  the 
government  wTere  enabled,  at  the  expiration  of  twenty-one  years  after  the  completion 
of  a  line  of  railway,  to  take  it  into  their  own  hands.  But  this  provision  only  applied 
to  railways  constructed  after  the  passing  of  the  act  of  1844;  and  consequently  the 
parties  who  made  those  lines  did  so  knowing  that  they  were  liable  to  have  that  act 
put  in  operation  against  them.  Those  parties  had,  therefore,  no  right  to  complain;  but 
there  was  no  such  act  as  that  of  1844  applying  to  telegraphs. 

Yet  it  does  not  appear  that  it  was  intended,  even  by  the  government, 
to  pay  tbe  companies  so  extravagant  a  bonus  as  they  did  in  the  end 
receive— sufficient  to  send  stocks  up  from  200  to  400  per  cent,  in  tbe 
market. 

Tbe  act  itself  provides  for  tbe  payment,  except,  as  I  bave  said,  in  tbe- 
case  of  tbe  United  Kingdom  Company,  of  u  twenty  years’  purchase 
of  tbe  net  profits  of  tbe  companies  ”  during  tbe  fiscal  year  1867-’68, 
and  out  of  these  sums,  contrary  to  tbe  course  which  Mr.  Hubbard 
thinks  our  Government  should  pursue,  tbe  companies  were  required  to 
pay  their  own  debts. 

Now,  when  we  reflect  that  a  reliable  stock  which  pays  5  per  cent,  in 
England  is  a  very  good  investment,  (4J  per  cent,  being  all  that  tbe  gov¬ 
ernment  would  guarantee  to  its  favorite  project,  tbe  Red  Sea  and  India 
Cable  Company,)  and  when  we  further  consider  bow  easily  the  compa¬ 
nies  could  bave  misled  tbe  government  as  to  tbe  value  of  their  prop¬ 
erty,  it  will  not  require  a  great  stretch  of  imagination  to  suppose  that 
gentlemen  in  Parliament  really  thought  that  by  paying  twenty  years’ 
purchase  they  were  only  giving  100  per  cent,  on  tbe  paid-up  capital, 
with  probably  a  slight  advance  for  the  compulsion.  That,  I  say,  is  a 
possible  supposition. 

The  telegraph  companies  in  England  had  only  a  lease-hold  interest  in 
their  lines,  the  freehold  being  in  the  railways;  and  the  average  duration 
of  their  leases  being  twenty-five  years,  the  government  claimed  it  was 
doing  well  to  get  the  terms  for  twenty  years’  profits.  Many  members, 
however,  did  not  take  the  same  view. 

It  will  be  remembered  that  the  companies  at  first  violently  opposed 
the  measure,  but  became,  as  soon  as  they  found  what  favorable  terms 
they  were  likely  to  get,  its  strong  supporters.  Their  stock  took  a  sud¬ 
den  rise  toward  the  close  of  the  session,  which  attracted  the  suspicion 
that  they  were  getting  too  much  money.  Allusions  were  made  to  the 
fact  in  the  house. 

Mr.  Gladstone  said,  (Hansard,  vol.  193,  p.  1586 :) 

That  at  all  events,  at  that  time  (before  the  companies  knew  of  the  proposed  terras) 
the  companies  treated  the  proposed  purchase  as  a  disadvantage.  The  price  of  the  Elec¬ 
tric  Telegraph  Company’s  shares  was  then  £153;  on  the  23d  of  June,  just  after  the 
reference  in,  committee,  the  shares  had  risen  to  £i65.  The  rise  might  be  taken  to  rep¬ 
resent  the  normal,  fair,  and  legitimate  improvement  in  the  value  of  the  property  con¬ 
nected  with  the  approximate  realization  of  the  plans  of  the  government.  But  what 
were  they  to  say  when,  instead  of  a  rise  of  £12  between  the  2d  of  January  and  the 
..23d  of  June,  they  found  a  rise  of  £41  between  the  23d  of  June  and  the  21st  of  July  ? 


A 


25 


\ 


And  would  the  reasoning  of  the  honorable  and  learned  gentleman  account  for  that? 
He  had  set  up  an  iugenious  theory  that  there  was  something  so  delightfully  scientific 
in  the  possession  of  telegraph  property  that  it  attracted  to  itself,  quite  irrespective  of 
vulgar  calculation,  what  was  known  as  a  prctium  affectionis  ;  but  he  was  afraid  that  the 
change  which  had  occurred  during  the  last  few  weeks  must  be  attributed  to  consider¬ 
ations  of  a  different  character.  The  Electric  Telegraph  Company’s  shares  were  £153 
on  the  2d  of  January,  £165  on  the  23d  of  June,  and  £203  on  the  1st  of  July;  and 
the  Magnetic  Company’s  shares  were  £115  on  the  2d  of  January,  £125  on  the  23d 
of  June,  and  £150  on  the  21st  of  July.  In  the  former  case  the  increase  was  one- 
fourth,  and  in  the  latter  it  was  one-fifth,  between  Juno  and  July.  Comparing  the 
case  of  the  telegraphic  companies  with  that  of  the  landed  proprietors,  he  could  not 
see  any  reason  for  a  deviation  from  the  established  practice  of  resorting  to  arbitra¬ 
tion.  In  the  case  of  railways,  we  could  not  do  without  the  land  required  for  them, 
but  we  could  do  without  the  property  of  these  telegraph  companies,  and  it  was  not 
necessity,  but  it  was  equity  and  policy  which  led  us  to  think  it  necessary  to  ac¬ 
quire  them.  It  was/only  a  sense  of  equity  that  prevented  the  state  competing  with 
the  companies,  as  it  was  open  to  private  persons  to  do  at  any  time.  Therefore,  he  did 
not  see  any  ground  of  a  high  order  for  foregoing  arbitration  in  the  case  of  these  com¬ 
panies.  The  position  was,  undoubtedly,  an  anomalous  one.  It  was  the  misfortune 
and  not  the  fault  of  the  right  honorable  gentleman  that  the  house  was  called  upon 
to  give  something  in  the  nature  of  assent  to  a  presumptive  bargain  made  by  the  gov¬ 
ernment,  and  which  had  received  the  parliamentary  sanction  of  a  committee  at  a  time 
when  it  was  impossible  for  the  house  to  complete  the  operation  by  passing  another 
.  bill ;  first,  because  they  did  not  know  the  facts  ;  and  second,  because  the  right  honor¬ 
able  gentleman  would  not,  under  the  circumstances,  enter  upon  such  a  financial  oper¬ 
ation.  That  would  be  a  matter  of  comparative  insignificance,  if  the  question  were  to 
be  considered  by  the  same  body  next  year ;  but  unfortunately  a  dissolution  intervenes 
and  the  case  must  be  referred  to  an  entirely  different  tribunal.  The  honorable  and 
learned  gentleman  stated  that  the  new  Parliament  must  come  to  a  free  and  unfettered 
judgment  with  regard  to  the  terms.  Now,  there  were  certain  occasions  in  which, 
while  Parliament  was  not  legally  bound,  it  was  bound  by  the  strictest  laws  of  honor  ; 
and  this  Parliament  had  no  right  to  put  the  members  of  the  new  Parliament  in  the 
position  of  having  it  said  to  them,  “  You  are  not  free  ;  you  are  bound  by  the  assent  of 
those  who  have  gone  before  you.”  The  new  Parliament  would  not,  could  not,  and 
ought  not  to  admit  that  it  was  bound.  It  must  have  not  only  a  legal  but  a  moral  free¬ 
dom  of  choice.  No  doubt,  it  would  give  due  respect  to  the  authority  of  the  govern¬ 
ment,  of  the  department,  and  of  any  vote  of  the  House ;  but  these  would  come  before 
it  as  the  elements  of  the  case  for  its  final  decision,  and  not  as  laws  determined  before¬ 
hand. 

It  was  of  the  greatest  importance,  it  should  he  thoroughly  understood,  that  this  Par¬ 
liament  was  not  attempting  to  fasten  on  the  new  Parliament  an  obligation  that  would 
be  ultra  vires,  and  it  was  desirable  that  this  should  be  placed  on  record  by  the  unequiv¬ 
ocal  declarations  of  members  of  Parliament. 

However,  the  time  was  short,  and  the  bill  was  passed ;  the  stock  went 
up  enormously,  as  I  have  said,  and,  when  the  money  bill  came  up  at  the 
next  session,  the  fears  of  Gladstone  and  others  were  fully  realized,  and 
the  estimate,  which  had  grown  from  £2,200,000  to  over  £7,000,000,  was 
passed  as  a  matter  of  course,  to  carry  out  an  existing  contract. 

In  fact,  the  government  which  made  the  preliminary  agreement  had 
bound  up  the  next  government  and  Parliament  so  tightly  by  arranging 
for  indefinite  compensation  of  the  companies  in  case  the  money  bill 
should  not  pass,  that  it  was  a  question  of  serious  importance  whether 
it  was  not  the  best  way  out  of  a  bad  bargain  to  go  straight  through 
with  it. 

Expressions  of  regret,  however,  were  not  wanting.  Mr.  Crawford,  a 
strong  opponent  of  the  original  bill,  said,  (Hansard,  vol.  198,  p.  759:) 

He  confessed  the  terms  now  proposed  to  be  given  to  the  companies  were,  in  his 
opinion,  exorbitant  and  preposterous  beyond  all  reason.  Still  he  thought  the  house* 
was  bound  by  its  bargain.  Parliament  undertook  last  year  to  pay  these  companies 
twenty  years’  purchase,  and  if  it  could  be  shown  that  the  profits  amounted  to  the  sum 
set  down,  the  house  could  not  help  itself  without  breaking  faith  with  the  companies. 
He  thought  the  bargain  a  very  bad  one,  but  he  was  afraid  it  must  be  carried  out. 

Now,  it  is  such  a  precedent  as  this  that  we  are  asked  to  follow. 

Mr.  Orton  tells  us,  if  we  take  the  lines,  to  throw  away  the  advantages 
we  have  already  acquired  by  contract  with  the  companies,  and  buy  him 


26 


out  on  the  principle  of  constructive  damages.  Mr.  Hubbard  agrees  to 
that,  but  asks  us  to  let  the  opposition  companies  in  also,  and  by  a  pre¬ 
liminary  act  (for  this  bill  is  only  the  prelude  to  a  game  in  which  you 
will  be  called  upon  in  a  year  or  two  to  take  a  hand)  to  commit  ourselves 
to  a  valuation  which  Mr.  Scudamore,  with  all  his  ability,  could  not  keep 
the  English  companies  from  fixing  to  suit  themselves. 

With  all  respect  to  these  gentlemen,  we  ought  not- to  agree  to  any 
such  arrangement,  especially  when  we  can  do  so  much  better.  I  do  not 
wish  to  be  understood  as  admitting,  in  any  degree,  the  doctrine  of  com¬ 
pulsory  damages  adopted  by  the  British  government.  In  fact,  it  has' 
been  settled  in  Massachusetts  and  the  decision  affirmed  by  the  Supreme 
Court  of  the  United  States  (Charles  River  Bridge  Company  vs.  Warren 
Bridge  Company,  11  Peters,  420)  that  where  a  government  possesses  the 
right  to  erect  public  works  and  chooses  instead  to  purchase,  under  its 
right  of  eminent  domain,  works  erected  by  a  corporation  under  its  license, 
it  is  bound  only  to  pay  for  the  cost  of  such  works  and  not  for  the  profits 
which  may  have  accrued  to  the  corporation,  its  creature. 

However,  even  if  we  admit  the  British  doctrine  abstractly,  the  United 
States  stand  in  an  entirely  different  relation  to  the  telegraphs  from  that . 
occupied  by  Great  Britain. 

With  the  same  right  of  eminent  domain  over  the  subject  as  had  the 
British  government,  derived,  as  I  hold,  from  the  two  clauses  of  the  Con¬ 
stitution  providing  for  post-roads  and  regulating  commerce  between  the 
States,  our  Government  has,  by  repeated  liberal  enactments,  placed 
itself  in  a  much  more  favorable  position  for  the  acquisition  of  the  tele¬ 
graph. 

The  first  line  was  built  and  for  some  years  maintained  at  Government 
expense,  avowedly  as  an  auxiliary  to  the  Post-Office,  and  only  aban¬ 
doned  through  the  short-sightedness  of  those  who  could  not  appreciate 
its  importance,  and  thought  it  too  great  a  burden  on  the  Treasury. 
From  that  time  to  this,  however,  Congress  and  the  States  have  always 
dealt  in  the  most  liberal  manner  with  the  companies. 

In  February,  1855,  parties  proposing  to  build  a  line  to  the  Pacific 
were  granted  the  right  of  way  and  protection  on  public  lands. 

In  March,  1857,  the  Atlantic  Telegraph  Company  received  consider¬ 
able  aid. 

In  June,  1860,  the  Secretary  of  the  Treasury  was  authorized  to 
advertise  for  proposals,  “for  the  use.  by  the  Government/7  of  a  line  from 
the  Missouri  River  to  Salt  Lake,  and  to  offer  the  parties  constructing 
such  line  the  right  of  way  nnd  other  franchises  on  public  lands  and  a 
bonus  of  $40,000  per  annum  for  ten  years,  provided  that  if  the  Govern¬ 
ment  business  should  in  any  one  year  exceed  that  sum,  the  excess 
should  be  reported  to  Congress.  On  the  other  hand,  the  rates  were 
limited  to  $3  for  ten  words  between  the  points  named.  Priority  for 
Government  messages  was  reserved,  and  the  free  use  of  the  line  by  the 
Observatory,  &c.,  for  scientific  purposes. 

Well,  this  line,  which  is  the  one  alluded  to  by  Mr.  Orton  the  other 
day,  was  built,  and  Mr.  Charles  M.  Stebbins,  an  old  telegraph  superin¬ 
tendent  and  now  a  successful  and  respected  merchant,  doing  business 
in  three  or  four  cities  of  the  country,  was  one  of  the  builders.  I  call 
attention  to  his  sworn  statement  on  page  82  of  Mr.  Washburn’s  report: 

Among  others  tliey  (the  Western  Union  Company) 'bought  the  Missouri  and 
Western  stock,  paying  some  cash  and  some  stock.  They  also  built,  in  partnership 
with  myself,  the  Pacific  telegraph  from  Brownsville,  Nebraska,  to  Salt  Lake,  Utah, 
some  1,100  miles,  (Congress  gave  this  line  $40,000  per  annum  for  ten  years — in  all, 
$400,000  as  a  bonus,)  which  cost,  by  considerable  financiering  on  the  part  of  two  of  the 


27 

Western  Union  directors,  $147,000.  Upon  this  expenditure,  they  issued  $1,000,000  of 

stock. 

This  $1,000,000  of  Pacific  telegraph  stock  (prominent  men  of  the  Western  Union 
Telegraph  Company  being  the  sole  owners)  was  afterward  taken  into  the  Western 
Union  Telegraph  Company  by  issuing  therefor  $2,000,000  of  Western  Union  Telegraph 
Company’s  stock.  After  this  the  Western  Union  Telegraph  Company’s  stock  was  tripled , 
by  which  manipulation  an  original  expenditure  of  $147,000  (and  a  par£  of  that  not 
honestly  spent)  came  to  represent  $6,000,000  of  Western  Union  Telegraph  stock. 

So  that  the  Government  paid  in  annual  installments  nearly  three 
times  the  cost  of  the  line. 

Mr.  Orton  intimates  that  the  Government  business,  which  was  done 
free,  more  than  covered  the  entire  amount  of  the  annual  subsidy.  Now, 
without  going  outside  the  limits  of  this  discussion,  the  fact  is  the  law 
required  the  Secretary  of  the  Treasury,  on  the  motion  of  the  company, 
to  report  each  year  the  excess  of  Government  business  over  the  $40,000, 
with  a  view  to  its  payment.  The  company  was  aware  of  this  provision 
of  the  law ;  their  system  of  accounts  was  just  as  perfect  then  as  it  is 
now^;  yet  the  only  time  a  report  was  made  was  in  18GG,  just  after  the 
war  had  closed,  and  Government  telegraphing  was  at  its  height. 

Suppose,  however,  the  Government  business  had  exceeded  $40,000; 
I  think,  Mr.  Chairman,  you  would  not  object,  if  you  owned  the  line,  to 
do  the  Government  business  for  nothing,  and  to  adopt  a  rate  of  $3  for 
eleven  hundred  miles  for  private  business  and  stick  to  it ,  if  you  could 
be  guaranteed  30  per  cent,  annually  and  in  advance  on  your  investment. 

It  more  than  believed,  however,  that  the  company  did  not  keep  its 
agreement  in  regard  to  rates  for  private  business;  and,  in  fact,  this  is 
one  of  the  causes  which  led  to  the  favoring  of  a  Government  telegraph 
by  gentlemen  from  the  Pacific  coast,  and  its  advocacy  by  Gratz  Brown 
in  the  Senate,  and  Mr.  Alley  in  the  House,  when  the  law  of  186G  was  up 
for  discussion.  f 

The  occasion  of  that  law  was,  as  you  know',  a  proposition  to  incorpo¬ 
rate  a  ‘‘national  telegraph  company,”  with  the  special  privileges  which 
were  made  general  in  the  act  as  it  passed.  The  Postmaster  General 
then  discouraged  the  idea  of  a  Government  telegraph,  and  the  Senate 
committee,  to  which  the  subject  had  been  referred,  was  obliged  to  turn 
its  attention  elsewhere  for  relief  from  the  Western  Union.  The  Na¬ 
tional  Company  appeared  to  offer  it  and  agreed  to  accept  a  general  law 
and  to  submit  to  wholesome  restraint.  The  original  projet  of  the  bill 
contained  a  provision  “that  the  United  States  may  at  any  time  purchase 
such  lines  at  the  appraised  value  of  the  same,”  but  before  it  passed  the 
words  were  changed  to  conform  to  what  it  was  supposed  would  be  the 
policy  of  the  Government  when  the  finances  should  be  in  better  condi¬ 
tion,  and  the  provision  of  the  law  reads  “  that  the  United  States  may 
at  any  time,  after  the  expiration  of  five  years  from  the  passage  of  this  actf 
purchase  such  lines  at  an  appraised  value,  &c. 

The  ultimate  object  of  the  act  was  plainly  the  assumption  of  the  tele¬ 
graphs,  at  some  future  time,  (after  the  limit  fixed  in  the  act,)  by  the 
Government,  and  in  this  view  it  was  fully  discussed.  The  third  clause 
was  certainly  not  intended  as  a  mere  check  on  the  companies,  something 
to  be  held  in  terrorem  over  them  as  a  penalty  for  the  violation  of  the 
other  sections  or  other  laws.  If  so,  why  postpone  its  operation  for  five 
years?  Why  not  let  it  go  into  effect  at  once?  No,  the  five  years  were 
given  as  a  time  for  preparation.  It  was  fair  notice  to  the  world  that  the 
Government  meant  to  assume  the  lines.  The  contract  for  sale  was  imme¬ 
diate,  but  the  right  of  £he  Government  \yas  not  to  accrue  until  the 
owners  should  have  had  time,  at  least,  to  close  up  their  affairs.  The 
compulsion,  if  that  can  be  calle‘d  compulsion,  which  was  so  eagerly  sub- 


28 


mitted  to  by  tbe  companies,  was  in  that  act,  and  the  damages  therefor 
were  paid  in  the  first  sections.  Now,  when  we  exercise  our  right  ot 
entry  and  pay  for  the  thing  itself,  are  we  to  be  told  that  we  must  pay 
the  damages  over  again? 

Allow  me,  if  you  please,  to  analyze  that  law  as  briefly  as  possible. 

On  the  part  of  the  Government  are  the  following  valuable  considera¬ 
tions  : 

First,  the  privileges  on  public  land  of  right  of  way,  cutting  timber, 
&c.,  and  the  occupation  of  sufficient  land  at  intervals  of  fifteen  miles  for 
their  stations,  which  privileges,  although  perhaps  lightly  esteemed  by 
the  Western  Union  Company,  were  thought  worthy  of  striving  for  by 
the  National. 

Next,  the  right  of  way  over  all  post-roads,  which,  under  the  act  of 
July  7,  1838,  includes  all  railroads. 

This  is  a  franchise  so  highly  prized  by  the  Western  Union  Company 
that  they  scarcely  believe  in  their  own  good  fortune,  and,  though  the 
law  has  been  declared  constitutional  by  the  United  States  courts  in  the 
Virginia  injunction  case,  they  have  appealed  it  in  order  to  have  the 
decree  confirmed  by  a  higher  tribunal.  To  the  opposition  companies, 
of  course,  this  privilege  is  exceedingly  valuable. 

Not  less  important  than  these  are  the  considerations  implied  in  the 
act.  First  comes  the  assistance  of  the  military  to  enforce  it  in  the  South, 
which  Mr.  Orton  tells  ns  weighed  very  strongly  with  him,  or  whoever 
was  then  president  of  his  company.  I  remember  the  instance  very  well 
when  the  lines  in  Georgia  were  torn  down. 

The  second  implied  consideration  is,  that  the  Government  would 
abstain  from  entering  into  the  telegraph  business  itself  (which,  of  course, 
it  had  a  perfect  right  to  do)  for  five  years  from  the  passage  of  the  act. 
This  matter  is  referred  to  by  both  Mr.  Orton  (page  119)  and  Mr.  Hub¬ 
bard,  (page  141,  General  Washburn’s  report.) 

The  third  implied  consideration,  also  claimed  by  both  these  gentlemen, 
is  still  more  important;  for  while  the  Government  had  a  perfect  right 
to  go  into  the  telegraph  business  independently  of  all  the  companies,  it 
had  also  the  right,  and  the  wording  of  this  act  and  its  acceptance 
expressly  confirm  that  right,  to  purchase  the  lines  of  any  one  or  two  of 
them,  and,  with  its  facilities,  to  drive  the  others  altogether  out  of  the 
field.  The  British  act  also  reserved  that  right ;  but  while  that  looked  to 
a  forcible  assumption  of  the  telegraphs  on  the  Government’s  own  terms, 
our  act  received  the  full  assent  of  the  companies  to  all  its  provisions ; 
and  only  the  finest  sense  of  equity  can  restrain  us  from  buying  the  lines 
where  we  can  get  them  the  cheapest  and  going  into  the  business.  When, 
therefore,  the  companies  say  that  Congress  agreed  not  to  do  the  tele¬ 
graphing  for  five  years,  when  it  does  do  the  business  to  buy  the  lines 
and  not  build,  and  when  it  buys  to  buy  out  everybody,  it  seems  to  me 
that  they  ought,  in  honor  to  themselves,  to  show  that  they  did  not  take 
these  and  the  other  great  gifts  of  a  generous  Government  without  rem 
dering  some  equivalent. 

What  is  there  on  the  other  side?  A  stipulation  to  give  Government 
messages  priority ;  a  stipulation  to  transmit  them  at  rates  to  be  fixed 
by  the  Postmaster  General;  and  a  stipulation  for  the  purchase  of  the 
lines  at  an  appraised  value  any  time  after  five  years  from  the  date  of 
the  act. 

The  first  two  of  these  stipulations  lay  entirely  dormant  until  the  five 
years  had  passed,  and  the  third  stipulation  became  subject  to  enforce¬ 
ment;  and  then,  at  the  suggestion  of  this  committee,  the  companies 


29 


were  gently  reminded  of  what  they  had  allowed  to  slumber  peacefully 
on  the  pages  of  the  statute-book  for  all  that  time. 

Like  the  Western  Union  Company,  when  it  forgot  to  present  its  bills 
for  the  surplus  of  Government  business  over  the  Pacific  subsidy,  the 
Government  made  no  claim  for  a  refund  on  the  rates  for  five  years  back; 
but  a  special  service  having  arisen,  the  Government  rates  were  put  in 
operation.  They  have  been  in  operation  nearly  a  year,  and  now  the 
company  principally  affected  proposes  to  abrogate  the  agreement  unless 
it  is  allowed  to  construe  the  law  in  its  own  way. 

The  third  stipulation,  according  to  Messrs.  Orton  and  Hubbard,  is 
utterly  void,  and  the  contract,  so  far  as  it  is  concerned,  a  nudum  pactum. 
If  not,  what  is  its  effect?  Does  it  give  the  Government  the  abstract 
right  to  enter  upon  the  telegraph  business?  That  is  granted  by  the 
Constitution.  Does  it  convey  to  the  United  States  the  right  o£  eminent 
domain  over  the  lines  of  the  companies?  If  that  is  not  inherent  in  the 
United  States,  it  is  then  merely  a  question  of  jurisdiction  of  the  State 
and  national  governments,  and  less  power  than  a  State  can  make  the 
concession. 

The  Federal  Government  acquires  property  in  the  States  either  by 
purchasing  it  first  and  then  procuring  jurisdiction  from  the  State  legis¬ 
lature,  or  by  first  getting  the  State  to  condemn  it  and  then  paying  the 
appraised  value.  In  the  one  case  the  owner  gets  the  contrackt-price,  and 
in  the  other  he  may,  perhaps,  get  damages;  but  in  neither  case  can  he 
convey  or  receive  compensation  for  any  public  right  over  the  property. 

What  is,  then,  the  value  of  this  provision  of  the  act  of  I86G,  the 
coming  substance  of  this  shadow  that,  for  five  years,  was  all  the  Govern¬ 
ment  had  to  show  for  the  privileges  it  conferred  and  the  obligations  it 
entered  into  by  that  act?  Was  it  not  expressly  meant  to  get  rid  of  all 
questions  of  damage  for  want  of  notice,  inconvenience  to  the  owners  of 
the  property,  and  the  like,  which  might  arise  in  an  ordinary  case  of 
condemnation  and  sale? 

What  are  the  words  of  the  law  ?  “ Provided. ,  however ,  That  the  United 
States  may  at  any  time,  after  the  expiration  of  five  years  from  the  date 
of  the  passage  of  this  act,  for  postal,  military,  or  other  purposes,  pur¬ 
chase  all  the  telegraph  lines,  property,  and  effects,  of  any  or  all  of  said 
companies,  at  an  appraised  value,  to  be  ascertained  by  five  competent, 
disinterested  persons,  two  of  whom  shall  be  selected  by  the  Postmaster 
General  of  the  United  States,  two  by  the  company  interested,  and  one 
by  the  four  so  previously  selected.7’ 

‘‘Telegraph  lines,”  telegraph  property,  and  telegraph  effects.  Not  so 
many  poles  and  so  many  pounds  of  wire,  I  grant  you,  but  a  telegraph 
system ,  equipped  and  ready  for  business. 

What  was  the  object  of  that  provision  ?  Why,  to  secure  to  the  Gov¬ 
ernment  a  system  of  telegraphs  without  the  trouble  cf  building  it.  The 
Government  bound  itself  not  to  build  lines,  and  gave  other  valuable 
considerations  to  the  companies,  for  the  purpose  of  securing  certain 
property;  and  yet  we  are  told,  when  we  come  to  enforce  the  contract, 
that,  to  ascertain  the  value  of  that  property,  we  must  go  into  the  stock 
market,  see  how  much  each  individual  stockholder  bought  at,  allow  him 
for  all  he  has  made,  or  reimburse  him  for  all  he  has  lost,  and  then,  after 
doing  that,  add  to  the  sum  so  ascertained  constructive  damages  to  three 
or  four  times  the  amount  for  which  the  Government  could  build  lines  of 
equal  extent  and  much  better  quality. 

Mr.  Orton  wants  thirty  or  forty  millions  for  his  lines,  and  says,  “Would 
you  give  no  higher  price  for  a  line  doing  a  large  business  and  making 


30 


a  heavy  profit  than  for  another  working  at  a  loss  and  bankrupting  its 
owners  ?  ” 

Well,  as  the  Government  gets  precisely  the  same  thing  in  both  cases, 
and  precisely  the  thing  it  has  contracted  for,  I  do  not  see  why  you 
should. 

But  Mr.  Hubbard  comes  along  and  says,  “  I  agree  with  Mr.  Orton  as 
to  the  value  of  his  lines;  that  is  what  I  would  be  willing  to  pay  for 
them  in  the  stock  of  my  company,  and  turn  them  in  to  the  Government 
for  in  cash.  But  when  you  come  to  this  other  telegraph  system,  made 
up  of  poles,  wires,  and  instruments,  just  like  the  Western  Union,  you 
must  take  another  view  altogether.  You  must  pay  those  companies 
not  only  for  the  capital  they  have  sunk  in  the  enterprise,  but  for  the 
dividends  they  would  have  made  if  they  had  been  more  fortunate,  an 
additional  sum  for  being  compelled  to  give  up  this  lucrative  property, 
and  something  besides  for  the  benefit  they  have  conferred  upon  the 
public  in  reducing  the  rates  between  points  where  there  is  competition, 
and  increasing  them  between  points  where  there  is  not.7’ 

Now,  just  look  at  the  facts.  Was  there  any  coercion  on  the  part  of  the 
Government  *to  make  fclie  companies  enter  into  this  contract  ?  Has  there 
been  any  want  of  notice  to  the  owners  of  the  property  that  they  are 
under  an  obligation  to  sell  to  the  Government  %  Hid  not  every  man 
who  has  bought  or  speculated  in  telegraph  stock  for  the  last  six  years 
know  the  obligations  and  condition  of  the  companies'?  Ho  not  the  men 
who  have  run  Western  Union  stock  up  from  33  to  70  cents  within  the 
past  year,  and  the  men  to  whom  they  have  sold,  understand  the  relations 
of  that  company  to  the  Government;  and  whose  fault  is  it  if  they  do 
not? 

Mr.  Chairman,  I  may  not  understand  the  attitude  of  the  Western 
Union  Company  with  regard  to  this  signal-service,  but  if  the  feelings  of 
the  people  should  be  so  aroused  by  it  as  to  demand  that  the  Government 
take  possession  of  the  wires,  I  hope  you  will  take  care  that  no  chance  is 
left  open  for  this  immensely  watered  and  inflated  stock  to  come  under 
appraisement  on  the  pretense  of  a  compulsory  sale,  as  part  of  the  “tele¬ 
graph  lines,  property,  and  effects”  which  the  Government  needs  to 
transmit  the  dispatches  of  the  people. 

A  man  buys  a  5-20  bond,  say  in  a  foreign  market.  It  is  a  good  invest¬ 
ment  and  he  pays  a  good  price  for  it,  or  there  is  a  great  demand  for 
American  securities,  and  he  pays  a  fancy  price  for  it.  At  the  end  of 
five  years  the  Government  pays  him  his  interest  and  calls  in  the  bond. 
“  But,”  he  says,  “  I  bought  this  above  par  and  you  ought  to  reimburse 
me  for  my  loss.  Besides,  you  have  taken  away  my  chance  of  investment, 
and  I  may  not  be  able  to  find  another;  now  you  ought  to  give  me  some¬ 
thing  for  the  profits  I  should  have  made  if  you  had  not  enforced  your 
right  of  redemption.” 

The  Government  would  answer,  “You  bought  the  bond  with  full  notice 
of  our  right  to  call  it  in.  You  have  got  your  interest  and  we  are  glad 
of  it;  now  take  your  principal  and  see  if  you  cannot  invest  it  elsewhere. 
If  you  have  lost  by  speculation,  better  luck  next  time.” 

Now,  when  this  matter  of  purchase  comes  up,  what  are  you  to  do? 
You  cannot  go  into  the  exchange  and  buy  the  stock  with  its  three- 
quarters  water,  pay  the  individual  losses  of  the  stockholders,  or  the 
debts  which  bad  management,  to  say  the  legst,  has  saddled  upon  the 
companies,  and  then  add  to  that  a  bill  of  damages  for  twice  as  much 
again.  You  cannot  pay  400  per  cent,  on  the  capital  of  one  company, 
and  pay  for  the  lines  of  the  other,  as  Mr.  Orton  says  his  company  buys 


31 


unproductive  telegraphs,  at  so  much  per  pole  and  so  much  per  pound  of 
wire,  “to  be  taken  down  and  disposed  of?’  What,  then,  can  you  do? 

There  are  two  courses  equally  just  and  generous  to  all  the  companies 
which  you  can  pursue,  and  which  will,  I  apprehend,  lead  each  to  about 
the  same  result. 

First,  let  your  appraisers  take  into  account  everything  which  has 
entered  into  the  cost  of  the  telegraph  property  now  existing;  deduct 
from  that  cost  a  percentage  for  the  deterioration  of  the  lines  which  the 
Government  would  have  to  expend  in  reconstruction,  and  then  add  a 
reasonable  profit  for  the  length  of  time  which  it  would  take  the  Govern¬ 
ment  to  build  the  same  lines. 

The  second  course  is  to  see  for  how  much  the  Government  could  build 
good  lines  over  the  same  ground ;  deduct  from  that  a  percentage  for 
reconstruction  of  the  present  system,  and  add  interest  as  before  for  the 
time  which  the  Government  would  need  to  build  the  lines. 

I  say  I  think  both  of  these  methods  wrould  reach  substantially  the 
same  result,  but  I  have  reliable  data,  of  course,  only  in  regard  to  the 
second. 

Should  the  first  method  be  adopted,  however,  I  assert  that  the  total 
cost  of  the  franchises  owned  by  all  the  companies  will  not  make  up  for 
the  good  bargains  which  the  Western  Union  Company  alone  has  made, 
both  in  purchasing  lines  of  other  companies  and  in  building  their  own. 
On  the  first  point  I  will  quote  Mr.  Orton  again,  (p.  123,  Washburn’s 
report.) 

Mr.  Washburn.  I  have  a  statement  before  me,  which  purports  to  declare  that  Gen¬ 
eral  Stager  made  a  declaration,  under  oath,  to  the  commissioner  of  telegraphs  for 
Ohio,  of  the  value  of  lines  in  that  State  for  1868,  which  makes  the  value  $35  a  mile  of 
wire,  not  including  branches. 

Mr.  Orton.  If  you  will  reflect,  you  will  see  there  is  nothing  out  of  the  way  in  that. 
The  taxation  is  by  the  State  upon  property  estimated  according  to  a  custom  existing 
there,  which  has  all  the  sanctity  of  law.  That  custom  is  to  estimate  property  at  what 
it  could  be  sold  for,  for  instance,  by  the  sheriff.  Now,  then,  a  telegraph  line — and  I 
speak  from  experience,  for  we  have  been  the  largest  dealers  in  second-hand  telegraphs 
in  the  country — is  a  pretty  poor  piece  of  property  to  be  sold  by  the  sheriff.  Prima 
facie  it  is  good  for  nothing  as  a  telegraph.  It  becomes  simply  a  question  of  how  much 
a  certain  quantity  of  wire  would  be  worth  to  take  down  and  dispose  of. 

On  both  points  I  quote  from  Mr.  Stebbins’s  letter,  [p.  82 :]  J 

The  Western  Union  Telegraph  Cbmpany  bought  many  lines  very  cheaply,  by  first 
ruining  the  value  of  the  line  through  the  agency  of  competition  or  other  means.  They 
got  many  lines  for  nothing,  by  inducing  railroad  companies  to  pay  all  the  expenses  of 
construction  and  maintenance,  while  the  telegraph  company  received  all  the  benefits. 
They  built  other  lines  with  the  aid  of  subscriptions  to  be  paid  back  in  telegraphing  at 
high  rates,  after  the  completion  of  the  line.  They  absorbed  many  lin'es  by  giving  in 
lieu  their  own  stock,  which  was  then  valuable,  but  which  they  afterward  watered  so* 
that  it  has  now  become  comparatively  valueless.  The  original  stock,  as  I  have  all eadyr 
said,  has  had  eleven  parts  of  water  added  to  it.  This  is,  of  course,  in  some  measrre 
counterbalanced  by  the  many  valuable  lines  they  have  got  for  nothing,  or  for  very 
little.  Their  stock  has  been  swelled  by  taking  in,  finally,  all  the  other  lines  in  the 
country. 

These  statements,  I  may  say,  correspond  with  my  own  knowledge  on 
the  subject.  It  has  been  a  common  thing  among  the  division  superin¬ 
tendents  of  that  company,  when  they  meet,  to  compare  notes  and  mutu¬ 
ally  chuckle  over  the  advantageous  terms  they  have  made  with  the  rail¬ 
road  companies. 

Without  full  data,  1  am  of  course  at  the  mercy  of  those  who  have 
them,  but  I  do  not  believe  that  there  are  a  dozen  contracts  between  the 
Western  Union  or  its  predecessors  and  the  railroads  in  which  such  a 
thing  as  the  right  of  way  is  even  mentioned,  and  when  mentioned  it  is 
thrown  in  as  the  merest  make-weight. 

The  considerations  on  either  side  are  purely  tangible;  no  “incorporeal 


32 


hereditaments”  among  them.  Services  in  transportation  of  material  and 
employes,  distribution  of  poles,  use  of  special  cars  and  trains,  and,  in 
many  cases,  actual  aid  in  building  the  lines,  are  paid  for  by  the  use  of 
the  wires  5  and  since  the  accounts  have  been  kept  between  railroad  and. 
telegraph  companies,  the  balance  is  generally  largely  in  favor  of  the 
railroads.  So  I  am  told.  Of  course  you  will  want  to  know  all  these 
things  positively  before  you  act  on  either  the  Government  or  the  Hub¬ 
bard  plan. 

You  will  notice  that  the  railroad  company  put  up  the  poles  and  trans¬ 
ports  material  and  employes  in  return  for  having  its  messages  sent  free. 

The  few  cases  in  which  the  opposition  companies  have  built  along  rail¬ 
roads  and  paid  for  the  right  of  way,  (unnecessarily  of  course,  since  the 
act  of  1866,)  and  the  sums  paid  for  patents  and  other  franchises  by  all 
the  companies,  will,  I  am  sure,  be  more  than  balanced  by  the  cases  in 
which  the  Western  Union  Company  has  bought  out  whole  systems  at  a 
fraction  of  their  cost.  Hence  we  come  to  very  nearly  the  same  figures 
as  we  shall  reach  by  taking  the  other  mode  of  appraisal. 

Now,  suppose  the  other  method  of  valuation  to  be  adopted,  what  will 
the  lines  cost  ? 

On  pages  38  and  39  of  General  Washburn’s  report  some  lengthy  cal¬ 
culations  are  gone  into  to  ascertain  the  value  of  all  the  telegraphs  iu  the 
country,  but  the  estimates  are,  as  you  will  readily  see,  unnecessarily 
generous. 

There  is  no  need  of  going  behind  the  official  figures  of  the  Western 
Union  Company,  from  which  it  appears  that  their  best  lines  cost,  on  an 
average,  $115  per  mile  of  single-wire  line,  and  $32  per  mile  for  each 
additional  wire.  At  these  rates  the  Western  Union  lines  would  cost 
$7,350,000,  and  all  the  lines  of  the  country  $8,909,000. 

The  instruments  and  apparatus  are  worth  $300,0(30,  making $9,209,000, 
which  the  Government  should  pay — not,  however,  to  the  companies. 
At  least  20  per  cent,  of  that  amount  should  be  deducted  for  deteriora¬ 
tion  and  expended  for  re-construction,  leaving  $7,357,200  to  be  paid  the 
companies. 

Now,  if  the  Government  were  to  build  its  own  lines  it  could  do  so 
probably  at  a  much  less  cost  than  this,  because,  knowing  the  tele¬ 
graphic  necessities  of  the  country  it  could  arrange  a  comprehensive 
plan,  and  save  much  in  labor  and  construction  by  putting  all  the  wires 
on  any  route  up  at  the  same  time,  instead  of  adding  wires  from  time  to 
time,  to  meet  the  increase  of  business,  as  the  companies  have  done. 
I  do  not  know  exactly  how  much  this  saving  would  be,  and  I  hope  there 
will  never  be  any  occasion  to  know.  It  is  not  a  matter  which  the  Gov¬ 
ernment  should  press,  but  it  is  undoubtedly  one  that  would  be,  under 
certain  circumstances,  entitled  to  consideration. 

If  the  Government  were  to  build  lines,  however,  equal  to  the  present, 
for  $7,357,200,  it  would  have  to  borrow  money,  say  at  5  per  cent.,  and 
it  would  take  five  years  at  a  very  high  average  to  have  the  lines  in  a 
condition  to  be  worked  as  profitably  as  they  are  nowj  These  are  out¬ 
side  figures,  I  think  you  will  admit,  but  this  interest  might  very  pro¬ 
perly  be  claimed  by  and  paid  to  the  companies. 

This  would  add  $1,839,300  to  the  $9,209,000  expended  in  purchase 
and  reconstruction,  making  $11,048,300 — the  amount  which,  at  the  most, 
should  be  added  to  the  public  debt  for  the  acquisition  of  the  telegraph 
system.  That  is  the  highest  amount  you  can  pay  with  justice  to  the 
country.  It  will  give  the  companies  a  liberal  price  for  their  property 


33 


ami  secure  to  the  public  a  thoroughly  refitted  system  of  lines,  capable 
of  doing  at  least  twice  the  business  they  can  now  do. 

I  do  not  propose  to  go  into  the  question  of  the  capacity  of  the  lines 
for  business,  the  fullest  and  latest  information  on  that  point  being  con¬ 
tained  in  General  Washburn’s  report;  but,  as  a  practical  telegrapher,  I 
think  the  capacity  of  the  lines  would  be  doubled  without  the  erection 
of  a  single  wire.  If  the  reduction  of  tariff  occasioned,  as  I  believe  it 
would,  a  more  equal  distribution  of  the  business  throughout  the  day, 
by  the  introduction  of  a  large  class  of  social  messages,  the  capacity 
would  \>e  increased  in  still  greater  proportion. 

The  political  objections  to  this  measure  now  claim  attention.  I  have 
shown  that  in  all  of  the  post-offices,  where  the  postal  receipts  are  under 
$1,000  a  year,  the  labors  of  the  postmaster  and  operator  could  be  com¬ 
bined  and  a  better  class  of  officials  secured  by  the  payment  of  a  higher 
salary  and  the  requirement  of  something  more  than  a  political  quali¬ 
fication  from  the  incumbent  of  the  office.  This  is  a  low  estimate,  for 
there  are  many  points  at  which  more  than  one  hundred  letters  per  day 
are  handled,  where  one  man  could  attend  to  both  services. 

In  the  larger  cities,  neither  the  postal  nor  the  telegraph  service  would 
.gain  much  in  point  of  economy  or  efficiency  over  their  present  status 
by  amalgamation,  but  in  the  country  the  improvement  would  be  very 
great.  In  the  opinion  of  those  whose  views  should  carry  the  greatest 
authority,  a  postal  telegraph  is  a  direct  and  long  step  toward  true  civil- 
service  reform. 

I  have  made  no  account  of  the  numbers  of  offices  where  the  service 
•could  be  performed  by  the  clerks  of  the  post-office,  but  taking  simply 
those  where  the  receipts  are  under  $1,000,  we  have  4,279  offices  where 
the  postmaster  could  personally  perform  the  duties  of  an  operator,  leav¬ 
ing  1,328  offices  where  he  could  not.  At  an  average  of  three  operators 
to  each  of  those  offices,  we  would  have  an  army  of  four  thousand  office¬ 
holders  added  to  the  sixty  or  seventy  thousand  now  on  the  civil  list. 

Now,  I  will  admit  that  if  the  telegraph  system  is  to  be  controlled  and 
operated  by  men  who  know  nothing  of  telegraphing,  it  will  be  an  im¬ 
mediate  and  disastrous  failure.  1  do  not  see,  however,  how  you  can 
extend  the  system  of  political  appointments  to  a  service  that  depends 
so  entirely  on  technical  skill  and  education  as  the  telegraph. 

In  the  first  place,  you  will  require  all  the  telegraphers  in  the  country 
to  run  the  machine,  no  matter  what  their  political  opinions  or  affilia¬ 
tions  may  be.  Probably  more  than  half  of  them  are  not  legal  voters, 
and  those  who  are  are  generally  quiet,  intelligent  people,  whose  busi¬ 
ness  has  given  them  too  cosmopolitan  a  turn  of  mind  to  permit  of  their 
ever  becoming  strong  partisans.  In  fact,  the  only  telegrapher  politi¬ 
cian  I  ever  knew  was  an  old  comrade  of  mine  in  the  military  corps,  now 
a  State  senator  in  Alabama,  and  one  of  the  corporators  in  Mr.  Hubbard’s 
bill. 

I  do  not  think,  either,  that  you  can  induce  the  class  of  politicans  who 
are  generally  most  anxious  for  office  to  go  through  six  months’  or  a 
year’s  study  in  order  to  get  a  subordinate  position  in  the  telegraph  ser¬ 
vice.  The  higher  offices,  requiring  greater  knowledge  and  longer 
experience  on  the  part  of  the  officer,  would  be  still  more  secure  from 
political  influences. 

In  regard  to  the  advantages  possessed  by  a  private  company  in  point 
of  flexibility  of  administration  and  greater  degree  of  interest  on  the 
part  of  their  employes,  I  have  not  much  to  say.  I  think  Mr.  Orton 
once  jocularly  remarked  that  “  the  telegraph  was  about  as  big  as  the 
United  States,”  and  one  of  liis  employes  told  me  not  long  ago  that  there 
3  T 


34 


certainly  could  not  be  more  red  tape  in  any  department  of  the  Govern¬ 
ment  than  in  the  Western  Union  offices. 

My  own  experience  with  his  company  and  in  three  departments  of 
the  public  service  confirms  this  statement.  I  do  not  think  it  disparag¬ 
ing  at  all  to  the  management  of  the  Western  Union  Company,  for  this 
much-abused  red-tape  is  necessary  to  the  machinery  of  all  great  concerns. 

The  employes  will  work  the  hardest  generally  for  those  who  can  af¬ 
ford  to  pay  them  the  most.  They  have  no  direct  interest  now  in  the 
success  of  the  companies  beyond  their  own  salaries,  and  their  prospects 
for  promotion  are  no  better  than  they  would  be  in  the  public  service. 

The  idea  that  telegrams  would  be  more  liable  to  violation  under  a 
government  system  than  now,  is,  it  seems  to  me,  utterly  chimerical. 
Where  by  previous  arrangement  ciphers  are  available,  there  is  absolute 
secrecy,  and  where  they  are  not  I  do  not  see  why  operators  or,  say,  if 
you  please,  higher  officers,  should  be  more  interested  in  the  contents  of 
private  messages  than  they  are  now  as  private  citizens.  The  fact  is, 
the  more  messages  a  man  has  to  transmit  the  less  likely  he  is  to  remem¬ 
ber  any  of  them,  and  as  a  Government  rate  would  produce  a  large  in¬ 
crease  in  the  number  of  dispatches,  the  chances  for  a  breach  of  confi¬ 
dence  would  be  greatly  diminished. 

I  think  the  people,  with  the  experience  of  the  post-office  department 
before  them,  will  have  much  greater  confidence  in  a  Government  tele¬ 
graph  than  in  a  private  one.  Leaving  out  the  directors,  the  new  system 
will  be  managed  by  the  same  hands  that  control  the  present, one,  and 
if  better  pay  and  treatment  than  they  now  receive  is  going  to  demoral¬ 
ize  them,  I  say  let  them  be  demoralized. 

To  the  assertion  that  there  would  be  no  redress  against  the  Govern¬ 
ment  for  delays,  &c.,  in  transmission  of  messages,  I  have  only  to  say 
that  that  rests  entirely  with  you,  the  law-making  power.  Where  indi¬ 
vidual  negligence  is  proved,  the  remedy  stands  on  precisely  the  same 
footing  as  any  other  individual  action,  and  the  reports  show  man 3^  cases 
where  recovery  has  been  had  against  employes  of  the  post-office  for  ne¬ 
glect  or  malfeasance  and  against  postmasters  for  the  wrong-doing  of 
their  subordinates.  Where  the  amount  is  large  I  see  no  reason  why 
the  party  aggrieved  might  not  be  given  standing  in  the  Court  of  Claims, 
for  instance.  There  is  nothing  like  the  difficulty  in  obtaining  proof  in 
these  cases  that  there  is  in  case  of  the  loss  of  a  letter,  for  on  every  mes-  # 
sage  the  time  received  from  the  sender,  sent  over  the  wires,  received  at 
the  terminal  office,  and  delivered  to  the  addressee  are  plainly  marked, 
and  the  log-book  of  the  offices  shows  the  condition  of  every  wire  at  the 
time. 

Practically  the  case  is  this.  When  the  reclamations  are  small  the 
companies  pay  them,  and,  if  for  faulty  transmission,  assess  them  on  two 
operators,  one  of  whom  is  necessarily  innocent — both  are  very  fre¬ 
quently  if  the  weather  is  bad.  If  the  amount  of  the  claim  is  larger,  it 
goes  through  all  the  courts  and  costs  a  good  deal  before  it  is  settled. 

I  think  the  Belgian  or  the  English  system  will  compare  very  favora¬ 
bly  with  this,  both  as  to  the  number  of  complaints  and  the  manner  of 
settling  them.  You  cannot  think  this  point  of  lhuch  importance  how¬ 
ever,  if  you  pass  the  Hubbard  bill,  for  half  the  complaints,  at  least,  are 
for  non-delivery  or  delay  in  delivery,  with  which  duty  it  proposes  to 
charge  the  Government.  Suppose  a  postmaster,  acting  also  as  Mr. 
Hubbard’s  operator,  to  be  sued  for  delaying  a  message  as  the  agent  of 
the  company,  if  he  can  throw  the  blame  on  himself  as  postmaster,  he 
suddenly  be comes  “irresponsible.” 

I  find  that  I  have  already  touched  upon  most  of  the  points  I  intended 


35 


to  bring  forward  to  show  that  the  interests  of  telegraphers  would  be 
best  served  by  the  adoption  of  a  Government  telegraph.  A  few  words, 
however,  will  show  their  present  position,  and  how  it  would  be  af¬ 
fected. 

Expert  operators  are  always  in  demand  in  the  cities,  and  the  pay  is 
sufficient  to  support  one  person  very  well,  but  not  more.  If  they  are  so 
improvident  as  to  have  others  depending  upon  them  they  have  a  pretty 
hard  time.  Occasionally,  one  goes  into  the  country  and  gets  a  railroad 
agency  in  addition  to  his  telegraphic  duties,  and  manages  to  save  a  little 
money. 

But  two  inconveniences  result  from  this  course :  He  has  to  work  more 
hours,  trains  frequently  passing  in  the  night-time,  and  the  public  must 
go  to  the  depot,  generally  on  the  outskirts  of  tlie  town,  to  send  their  mes¬ 
sages.  Both  of  these  difficulties  would  be  obviated  by  combining  the 
telegraph  with  the  post-office.  The  hours  required  by  the  two  services 
are  identical,  and  the  removal  of  the  offices  to  the  centers  of  business 
would  cause  a  largely  increased  use  of  the  telegraph.  (In  England  this 
increase  was  estimated  at  15  per  cent.) 

Again,  the  standard  of  requirements  has  several  times  been  very 
much  lowered  by  the  establishment  of  mushroom  companies,  calling 
into  existence  a  class '  of  poorly  taught  operators*  who,  when  the  con¬ 
solidation  comes,  underbid  the  older  and  more  competent,  and  render  a 
less  efficient  service  for  less  pay.  So  much  was  this  evil  felt  five  or  six 
years  ago,  that  a  great  many  of  those  best  fitted  to  conduct  the  service 
left  it  altogether.  With  a  Government  monopoly  the  number  of  em¬ 
ployes  would  increase  only  gradually,  and  their  situations  would  be 
more  permanent. 

An  operator  can  learn  in  six  or  eight  months  to  transmit  and  receive 
correctly  and  quite  rapidly  by  sound,  and  in  the  large  offices,  where  the 
chief  operator  is  an  electrician,  that  is  all  that  is  required  of  the  sub¬ 
ordinate.  But  at  the  way-stations  the  same  electrical  knowledge  is 
required  of  the  operator  that  is  possessed  by  the  chief  operator  in  the 
city  ;  and  yet,  under  the  present  system,  no  man  who  has  given  much 
of  his  time  to  the  study  of  electrics  can  afford  to  take  a  country  office. 
Much  of  the  inefficiency  of  the  telegraphs  to-day  is  due  to  the  ignorance 
of  the  poorly  paid  way  operators. 

Now,  I  want,  before  closing,  to  enter  a  few  objections  to  Mr.  Hub¬ 
bard’s  bill. 

First  and  generally,  the  Government  has  no  right  to  make  any  such 
arrangement.  It  may  perform  a  public  function  "by  doing  the  public 
telegraphing  over  its  own  wires,  but  it  cannot,  with  propriety,  contract 
a  copartnership,  and  go  into  private  business  with  or  even  loan  its 
credit  to  private  parties  for  carrying  on  a  business  which  is  subject 
to  competition.  It  has  been  said  that  the  bill  does  not  propose  a  part¬ 
nership,  but  simply  an  agency — but  who  is  principal  and  who  is  agent 
does  not  very  clearly  appear.  It  would  be  an  interesting  question  in  a 
suit  for  damages  from  delay  of  a  message.  I  think,  however,  that  an 
arrangement  where  one  party  furnishes  the  room  and  another  the  ma¬ 
chinery  for  carrying  on  a  business,  where  one  collects  and  distributes 
and  the  other  operates  upon  the  material,  and  where  each  has  a  share 
of  the  profits  contingent  on  the  amount  of  business,  may  be  fairly 
described  as  a  partnership. 

The  whole  scheme  is  founded  on  a  false  analogy  sought  to  be  drawn 
between  it  and  the  manner  of  contracting  with  railroads  for  the  mail 
service.  A  railroad  is  a  common  carrier  of  merchandise  and  passengers, 
and  the  transportation  of  the  mails  forms  a  very  small  part  of  its  busi- 


36 


ness.  A  telegraph,  however,  has  bat  one  purpose,  and  is  good  for 
nothing  else. 

The  Government  owns  and  controls  its  mail-bags,  its  wagons,  and 
postal  cars,  as  well  as  its  offices,  and  employs  its  own  route-ageuts  and 
messengers.  In  fact,  it  has  control  in  the  mail  service  of  just  what  it 
would  have  if  it  purchased  the  telegraph — that  is,  all  the  agencies 
necessary  to  accomplish  its  purpose.  It  does  not  buy  the  railroads,  be¬ 
cause  it  cannot  go  into  the  freight  and  passenger  business  for  the  sake 
of  getting  its  mails  transported. 

My  specific  objections  to  the  bill  are  the  following: 

To  the  first  section  [line  7J  I  object  that  there  is  not  a  sufficient  in¬ 
crease  of  facilities,  and  no  provision  for  connection  with  offices  at  present 
existing  where  there  are  no  post-offices. 

To  section  2  I  object  that  the  rates  are  not  properly  graduated  ;  it  is 
too  great  a  leap  from  25  to  50  cents  for  the  difference  between  two  hun¬ 
dred  and  forty-nine  and  two  hundred  and  fifty-one  miles.  However,  a 
graver  objection  is  that  we  do  not  know  enough  about  American  rates, 
and  cannot  without  inspecting  the  books  of  companies,  to  fix  a  definite 
tariff  in  a  jmeliminary  bill.  I  need  not  again  allude  to  the  objection 
against  registered  messages  so  forcibly  presented  by  Mr.  Orton. 

Section  4  provides  for  telegraphic  money-orders  at  the  regular  rates 
in  addition  to  the  charge  for  registered  messages.  As  priority  does  not 
seem  to  be  granted  them,  they  might  be  allowed  to  go  at  regular  rates. 

Section  5  [line  1]  is  a  little  indefinite  as  to  the  character  of  the  “  spe¬ 
cial  contracts”  that  may  be  entered  into  “with  associations  and  the 
press  for  the  transmission  of  commercial  and  iiress  news.”  I  see  no 
reason  why  the  commercial  news  department  could  not  be  continued 
under  that  clause,  and  priority  given  to  all  sorts  of  “  associations,”  ac¬ 
cording  to  the  interests  or  preferences  of  the  company. 

Section  6,  so  far  as  taken  from  the  bill  of  General  Washburn,  is  good, 
yet  I  hardly  see  how,  if  we  are  to  dispense  with  the  book-keepers,  &c., 
as  Mr.  Hubbard  says,  we  can  get  the  full  statistics  this  section  pro¬ 
vides  for. 

The  whole  system  of  dual  management  provided  for  in  section  7  is 
impracticable,  and  the  division  of  power  and  responsibility  which  it 
contemplates  would  seriously  impair  the  working  of  the  system.  With 
even  the  closest  amalgamation  which  this  bill  could  effect  between  the 
post-office  and  the  company,  the  conflicts  of  interest  and  authority  would 
be  incessant.  Divide  up  any  bureau  of  the  Government  in  this  way 
and  see  the  result ;  of  ask  Mr.  Orton  if  he  wall  let  any  company  in  which 
he  is  interested,  and  for  which  he  is  responsible,  serve  two  masters. 

The  security  in  line  33  and  the  following  lines  is  not  sufficient  for  the 
interests  involved.  The  penalty  is  neither  ascertained  nor  ascertainable. 

What  would  the  people  say  while  the  Postmaster  General  was  look¬ 
ing  about  for  “some  suitable  party”  wTith  whom  to  “contract”  for  the 
business  in  case  of  the  failure  of  Mr.  Hubbard’s  company  to  perform 
its  obligations?  What  is  the  meaning  of  “  bound?”  Is  it  that  the  prop¬ 
erty  of  the  company  shall  be  forfeited  ;  and,  it  not,  how  is  the  Govern¬ 
ment  to  acquire  it  when  the  company  has  show  n  itself  unable  to  do  the 
work  and  has  control  of  all  the  lines  and  employes,  and  the  people  at  its 
mercy  ? 

Section  8,  line  31,  charges  the  Government  with  the  prosecution  of 
all  offenses  by  or  against  the  company. 

Section  9  provides  for  a  payment  of  5  cents  per  message  to  the  Gov¬ 
ernment,  wdiich  would  hardly  pay  the  rent,  saying  nothing  of  stationery 
and  delivery  expenses. 


37 


To  the  tenth  section  I  scarcely  know  what  to  say.  I  suppose  the 
gentlemen  there  named  are  men  of  wealth  ;  hut  if  they  propose  to  buy 
the  lines  at  Mr.  Hubbard’s  estimate  in  cash,  I  must  believe  that  they  do 
not  know  what  they  are  doing.  Mr.  Hubbard  will  not  object,  I  suppose, 
to  my  saying  that  he  means  to  commence  with  the  lines  of  the  opposi¬ 
tion  companies.  His  own  words  on  that  subject  are,  [Washburn’s  report, 
page  92 :] 

Mr.  Hubbard.  Another  suggestion  in  regard  to  that  is  this.  There  are  various  op¬ 
position  companies  at  present  in  existence  in  the  country,  which  have  rights  as  well 
as  the  Western  Union  Telegraph  Company,  and  which  must  be  considered.  These 
leading  opposition  companies  are  represented  among  the  corporators  of  this  bill.  Mr. 
Woodbury  Davis,  of  Maine,  represents  the  International  Telegraph  Company  of  Maine, 
in  which  the  brother  of  the  general  (Washburn)  is  one  of  the  directors.  Mr.  Sweet 
and  Mr.  Hammond  represent  the  Atlantic  and  Pacific  Telegraph  Company,  which  is 
also  oue  of  the  large  opposition  companies.  Mr.  Mason,  of  New  York,  whose  name  is 
to  be  inserted  in  the  bill,  is  a  representative  of  the  Franklin  Telegraph  Company.  The 
other  principal  telegraph  company,  the  Pacific  and  Atlantic,  are  not  represented,  al¬ 
though  they  have  at  different  times  asserted  to  me  and  approved  of  the  provisions  of 
the  bill.  It  was  thought  by  these  opposition  companies  that  it  was  better,  and  that 
they  would  prefer  to  unite  under  a  new  and  independent  corporation  rather  than 
under  the  wing  of  the  Western  Union  Telegraph  Company. 

Now,  Mr.  Hubbard  must  be  aware  tbat  bis  companies  cannot  fight 
the  Western  Union  Company  over  the  limited  ground  they  cover  at  the 
rates  he  proposes,  and  if  they  could  do  so  he  would  not  consent  to  use 
his  connection  with  the  Government  to  bankrupt  that  noble  institution, 
and  ruin  their  thirty  millions  of  investment. 

Hear  him  on  this  point,  [Washburn’s  report,  page  141 :] 

It  is  generally  conceded  that  some  action  by  Congress  is  necessary ;  four  plans  have 
been  presented  and  are  now  before  this  committee.  First,  that  of  Senator  Stewart,  of 
Nevada,  by  which  Congress  shall  establish  a  postal  telegraphic  system,  and  let  out  to 
the  lowest  bidder  the  privilege  of  erecting  lines,  keeping  them  in  repair,  and  transmit¬ 
ting  telegrams.  .  This  is  substantially  the  plan  presented  to  the  Committee  of  *the 
House  on  Post-Offices  and  Post-Eoads,  a  year  ago,  which  was  met  by  the  objection 
that,  by  the  act  of  June,  1866,  Congress  had  made  a  solemn  compact  with  all  the  tel¬ 
egraphic  companies  of  the  country  by  which  it  agreed  that  it  would  not  compete  for 
the  business  within  five  years;  that  at  the  expiration  of  that  period,  if  it  interfered, 
it  should  purchase  the  lines  at  an  appraised  valuation.  This  was  the  opinion  of  the 
House  committee  ;  and  although  doubts  may  be  entertained  in  regard  to  the  legality 
of  the  proposition,  yet,  on  further  reflection,  I  became  satisfied  that,  while  Cod gress 
might  legally  enter  into  the  business  of  telegraphy  without  buying  up  existing  lines, 
it  could  not  with  proper  respect  to  the  equitable  rights  of  others ;  for  on  the  dis¬ 
covery  of  the  telegraph,  Mr.  Morse  requested  Congress  to  adopt  it  as  a  part  of  the 
postal  system.  The  offer  was  declined,  and,  from  time  to  time,  Congress  has  passed 
laws  aiding  the  construction  of  lines,  regulating  their  use,  and  prescribing  the  terms 
on  which  it  should  have  the  right  to  buy  them.  It  has,  therefore,  offered  inducements 
to  these  companies  to  construct  new  lines  and  invest  property  in  them  ;  and  it  would 
l>e  a  breach  of  good  faith  to  establish  any  system  which  should  not  contemplate  their  pur¬ 
chase. 

Of  course,  then,  he  means  to  buy  up  the  Western  Union,  and  he 
has  honorably  bound  himself  in  this  bill  to  do  so  whenever  the  latter 
asks  it,  either  in  cash  or  in  stock — seller’s  option;  and  if  you  strike  out 
this  provision  in  order  to  attract  the  attention  of  practical  men  and 
capitalists  to  the  scheme,  you  will,  to  say  nothing  of  the  injustice  to 
the  Western  Union  Comany,  lose  entirely  the  co-operation  of  Mr. 
Hubbard.  He  must  be  counted  out  of  any  such  arrangement. 

I  should  like,  if  he  will  allow  me,  to  make  a  suggestion  to  that  gentle¬ 
man,  who  has  declared  his  first  object  to  be  the  public  interest. 

When  the  people  of  Boston  and  Charlestown  wanted  a  free  bridge, 
and  the  Charles  Biver  Bridge  Company,  whose  property  had  cost  $40,000, 
but  whose  profits  had  grown  to  be  more  than  that  sum  each  year, 
refused  to  sell  for  less  than  $500,000,  the  {State  found  and  chartered  a 


38 


company  of  gentlemen,  wlio  built  a  bridge  within  a  few  rods  of  the  other, 
with  the  understanding  that  they  were  to  pay  themselves  from  the  tolls, 
and,  at  the  end  of  six  years,  at  farthest,  turn  the  bridge  over  to  the  pub¬ 
lic  free  of  cost. 

There  is  an  example  worthy  of  Mr.  Hubbard’s  emulation,  and  if  he  will 
ask  for  such  a  charter  as  that,  after  the  companies  have  refused  to  sell 
to  the  Government  at  cost,  I  am  certain  no  one  will  object.  Of  course, 
however,  until  the  Government  has  proposed  to  the  jmesent  companies 
to  buy  their  lines,  and  the  proposition  has  been  declined,  neither  such  a 
charter,  nor  any  other  which  does  not  “  contemplate  their  purchase,”  can 
be  thought  of. 

I  fear,  however,  that  Mr.  Hubbard  will  not  act  upon  this  suggestion, 
but  will  stand  by  his  original  proposition.  In  that  case,  as  he  has  no 
prior  con  tract,  with  the  Western  Union  Company,  requiring  them  to  sell 
a  limited  description  of  property,  they  can  make  their  own  terms. 
Their  stock  is  at  75  per  cent.,  on  a  capital  of  over  forty  millions,  and 
their  good-will  (which  the  English  companies  charged  300  per  cent,  for) 
is  certainly  worth  twenty  millions  more  to  Mr.  Hubbard  and  his  asso¬ 
ciates.  That  is  a  rather  large  amount  of  cash  to  be  brought  together 
for  any  purpose.  I  think,  really,  that  unless  the  Western  Union  Com¬ 
pany  agree  to  take  Mr.  Hubbard’s  stock  in  payment  for  their  lines  his 
scheme  will  fall  through.  Suppose  they  do  take  the  stock,  and  are 
swallowed  up  in  this  new  combination — it  is  the  frog  swallowing  the 
anaconda. 

Uow,  Mr.  Chairman,  what  is  the  effect  of  this  bill.  It  is  simply  to 
commit  the  United  States,  in  the  same  way  that  England  was  com¬ 
mitted,  to  the  proposition  that  the  telegraph  lines  of  this  country  are- 
worth  fifty  millions  of  dollars. 

Pass  this  bill,  and  if  the  Western  Union  stays  out  Mr.  Hubbard  will 
be  back  here  next  session,  appealing  to  Congress  to  relieve  him  and  buy 
his  lines  on  his  plan  of  valuation.  If  the  Western  Union  comes  in,  the 
new  company  will  work  at  an  apparent  loss  for  a  little  wiiile,  and  then 
throw  itself  upon  the  generosity  of  the  Government.' 

What  is  the  Postmaster  General  then  to  do  1  The  telegraph  business 
of  the  country  cannot  stop  for  a  day  without  throwing  commerce  and 
everything  else  into  utter  confusion.  This  company  has  all  the  lines. 
There  is  no  other  “  suitable  party”  with  whom  he  can  “contract.” 
There  is  Ho  other  remedy  but  to  take  the  lines;  there  is  no  other  way 
of  taking  the  lines  than  by  appraisal,  and  the  Government  has  already 
committed  itself  to  a  method  of  appraisal  which  will  make  each  sep¬ 
arate  stockholder  a  millionaire. 

Gentlemen,  you  cannot  afford  to  take  any  action,  least  of  all  such 
action  as  this,  at  this  session. 

The  message  of  the  President  and  the  bill  of  Mr.  Hubbard  have  been 
referred  to  you,  as  the  Committee  on  Appropriations.  Whether  Mr. 
Hubbard’s  plan  succeeds,  or  the  present  system  remains  unchanged,  the 
people,  under  the  act  of  18G6,  are  the  reversioners  of  this  property. 
Would  it  not  be  well,  before  you  recommend  any  plan,  to  find  out  the 
extent  and  nature  of  the  property,  and  to  count  the  cost  to  the  Gov¬ 
ernment,  when  it  comes,  as  it  surely  must,  to  take  it  into  its  own  hands. 

I  have  gone  over  this  subject  very  superficially,  but  probably  at  greater 
length  than  I  should  have  done  in  view  of  the  short  time  you  have  to 
devote  to  it  at  present. 

I  am  extremely  obliged  for  your  patient  attention. 


39 


Statement  of  Mr.  George  B.  Prescott,  electrician  of  the  Western  Union 

Telegraph  Company. 

\ 

Mr.  Chairman  and  Gentlemen  of  the  Committee  :  During  the 
past  six  years  various  schemes  have  been  devised  for  uniting  the  postal 
and  telegraph  systems  of  the  United  States.  The  first  measure  of  this 
kind  was  proposed  in  the  first  session  of  the  Thirty-ninth  Congress,  in 
1865,  by  Hon.  B.  Gratz  Brown,  Senator  from  Missouri,  who  advocated 
the  construction  of  Government  telegraph  lines,  to  be  worked  in  con¬ 
nection  with  the  Post-Office,  for  the  transmission  of  messages  through¬ 
out  the  United  States  at  a  uniform  rate  of  3  cents  per  message.  The 
result  of  Mr.  Brown’s  efforts  was  the  adoption  of  a  resolution  by  the 
Senate  calling  upon  the  Postmaster  General  for  information  as  to  the 
expediency  of  making  the  telegraph  a  part  of  the  postal  system. 

On  the  2d  of  June;  1866,  Hon.  W.  Dennison,  the  Postmaster  General, 
after  conferring  with  the  various  telegraph  companies  and  experts  in 
the  United  States,  and  ascertaining  all  the  facts  which  he  considered 
necessary  to  enable  him  to  form  an  intelligent  judgment  upon  the  mat- ' 
ter,  made  a  report  to  the  President  of  the  Senate,  of  which  the  follow¬ 
ing  was  the  concluding  sentence  :  u  As  the  result  of  my  investigation 
under  the  resolution  of  the  Senate,  I  am  of  the  opinion  that  it  will  not 
be  wise  for  the  Government  to  inaugurate  the  proposed  system  of  tele¬ 
graphs  as  a  part  of  the  postal  service,  not  only  because  of  its  doubtful 
financial  success,  but  also  its  questionable  feasibility  under  our  political 
system.” 

No  further  efforts  wTere  made  to  secure  the  establishment  of  a  govern¬ 
mental  system  of  telegraphy  in  this  country  until  1868,  when  Hon.  E. 
B.  Washburne,  Representative  from  Illinois,  in  the  second  session  of 
the  Fortieth  Congress,  introduced  a  bill  for  the  construction  of  a  gov¬ 
ernmental  telegraph  line,  under  the  direction  of  the  Post-Office  Depart¬ 
ment,  between  New  York  and  Washington,  to  be  operated,  as  far  as 
practicable,  by  the  employes  of  the  Post-Office,  for  the  transmission  of 
messages  at  1  cent  per  word,  exlusive  of  date,  address,  and  signature, 
in  addition  to  3  cents  for  postage  and  2  cents  for  delivery. 

In  the  same  session  of  Congress  two  other  bills  for  the  construction 
and  operation  of  postal  telegraphs  were  also  introduced.  One  of  these 
provided  that  Congress  should  grant  to  Mr.  Gardiner  G.  Hubbard  and 
his  associates,  an  act  of  incorporation,  under  the  name  of  the  United 
States  Postal  Telegraph  Company,  and  confer  upon  it  the  right  to  con¬ 
struct,  maintain,  and  operate  lines  of  telegraph  over  all  post-roads 
within  the  United  States  and  Territories,  and  also  providing  for  a  part¬ 
nership  arrangement  between  the  United  States  and  the  Postal  Tele¬ 
graph  Company,  by  contract  with  the  Post-Office  Department,  under 
which  the  company  was  to  be  furnished  with  office-room,  stationery, 
lights,  and  fuel,  and  to  some  extent  with  clerks,  operators,  and  super¬ 
intendents,  at  the  cost  of  that  Department,  and  in  return  for  these 
advantages  the  company  was  to  send  messages  at  the  rate  of  25  cents, 
(of  which  the  Post-Office  Department  was  to  receive  5  cents,)  for  dis¬ 
tances  of  five  hundred  miles,  and  of  50  cents  for  distances  of  one  thou¬ 
sand  miles,  reserving,  however,  the  right  to  charge  extra  rates  for 
priority  of  transmission. 

The  third  bill  authorized  James  F.  Hail  and  his  associates,  under  the 
direction  and  supervision  of  the  Postmaster  General,  to  construct  lines 
of  telegraph  between  Boston  and  Washington  upon  any  line  of  travel, 


40 


and  be  protected  in  the  use  thereof,  and  that  all  necessary  materials 
required  for  constructing  the  lines  be  imported  free  of  duty. 

These  three  bills  were  referred  to  the  House  Committee  on  Post-Offices 
and  Post-Roads,  which,  after  a  thorough  and  exhaustive  examination 
of  the  subject,  extending  over  a  period  of  nine  months,  made  a  report, 
in  which  they  stated  that,  u  after  carefully  examining  and  considering 
the  propositions  contained  in  all  the  bills  and  papers  submitted  to  them, 
and  giving  much  time  to  the  hearing  of  parties  interested  for  and  against 
the  several  measures  presented,  they  were  of  the  opinion  that  neither 
of  the  bills  ought  to  receive  the  approbation  of  Congress.” 

The  full  and  explicit  disapproval  of  the  various  postal-telegraph 
schemes,  both  by  the*  Postmaster  General,  in  18G6,  and  by  the  unani¬ 
mous  report  of  the  Post-Office  Committee  of  the  House  of  Representa- 
tives,  in  18G8,  was  generally  regarded  as  the  probable  termination  of 
the  project;  but  in  the  second  session  of  the  Forty-first  Congress,  De¬ 
cember,  1869,  it  was  again  revived  by  Hon.  C.  C.  Washburn,  Repre- 
sentative  from  Wisconsin,  at  whose  request  the  House  authorized  the 
appointment  of  a  Select  Committee  on  Postal  Telegraph,  which  sat  for 
several  months  listening  to  arguments  for  and  against  the  several  meas¬ 
ures  presented  to  them,  but  failed  to  agree  upon  a  report.  Two  mem¬ 
bers  of  the  committee,  however,  Messrs.  Washburn  and  Palmer,  pre¬ 
sented  reports,  which  were  ordered  to  be  printed  and  recommitted. 
Mr.  Washburn’s  report  strongly  urged  the  necessity  for  the  purchase  of 
the  existing  lines,  and  the  creation  of  a  purely  governmental  telegraph, 
and  a  bill  was  introduced  by  him  for  securing  this  result. 

Mr.  Palmer’s  report  advocated  Mr.  Hubbard’s  scheme,  and  was  accom¬ 
panied  by* his  bill. 

No  further  action  was  taken  upon  either  of  these  bills,  and  the  dis¬ 
cussion  of  the  subject  of  governmental  intervention  in  the  business  of 
telegraphing  was  not  again  renewed  until  the  present  session  of  Con¬ 
gress. 

Although  all  the  facts  and  arguments  which  could  be  adduced  in 
favor  of  the  governmental  acquisition,  interference,  or  control  of  the 
telegraph  have  been  ably  presented,  I  think  it  must  be  conceded  that 
they  have  hitherto  failed  to  produce  a  conviction  of  tiie  expediency  of 
such  measures  in  Congress,  the  public  press,  or  any  considerable  num¬ 
ber  of  private  citizens. 

As  the  subject  has  been  so  fully  discussed  heretofore  and  now  pre¬ 
sents  no  new  features  of  importance,  I  will  not  occupy  your  time  with  a 
restatement  of  the  reasons  why  the  Government  should  not  intervene 
in  the  business  of  telegraphing,  but  invite  your  attention  to  the  pam¬ 
phlets  which  I  have  in  my  hand,  containing  the  argument  of  Hon.  Wil¬ 
liam  Orton,  president  of  the  Western  Union  Telegraph  Company,  on 
the  bill  to  establish  postal-telegraph  lines,  delivered  before  the  select 
committee  of  the  United  States  House  of  Representatives  in  May,  1870, 
and  to  the  remonstrance  of  the  Western  Union  Telegraph  Company 
against  the  postal-telegraph  bijl,  published  February  13,  1872,  as  em¬ 
bodying  the  views  of  the  company  which  I  represent  upon  the  subject 
now  under  consideration. 

Mr.  Dickey.  I  would  like  to  know  what  proportion  of  their  poles  the 
Western  Union  Telegraph  Company  actually  owns.  In  my  State  the 
telegraph  poles  along  the  lines  of  railroads  are  owned  by  the  railroad 
companies,  while  the  wires  are  used  by  the  telegraph  company,  under 
a  contract  with  the  railroad  companies. 

Mr.  Prescott.  As  a  rule,  the  Western  Union  Telegraph  Company 
owns  the  poles  upon  which  its  wires  are  supported.  There  are  a  few: 


41 


exceptions,  however,  and  the  principal  ones  are  the  Pennsylvania  Rail¬ 
road  Company,  over  a  portion  of  whose  route  oar  company  leases  the 
poles  of  that  company.  The  Union  and  Central  Pacific  Railroad 
Companies  own  the  telegraph  lines  on  one  side  of  their  road  and  the 
Western  Union  Telegraph  Company  own  the  lines  on  the  other  side. 
Many  railroads  are  constructed  through  sparsely  populated  districts, 
where  the  telegraph  business  is  not  sufficient  to  pay  the  operating  ex¬ 
penses,  and  in  such  cases  the  railroad  companies  contribute  to  the 
construction  of  the  lines  and  aid  in  their  operation,  receiving  as  com¬ 
pensation  a  commission  upon  the  public  business  which  is  done  on  them, 
besides  doing  their  own  business  free. 

The  Chairman.  Are  half  the  telegraph  poles  owned  by  the  railroad 
companies'? 

Mr.  Prescott.  No,  sir;  only  a  small  percentage  of  them.  As  a 
general  rule,  the  poles  furnished  by  the  railroad  companies  are  contrib¬ 
uted  to  the  telegraph  company  as  an  inducement  for  building  the  lines, 
and  become  the  property  of  the  latter. 

The  Chairman.  How  large  a  force  of  employes  has  the  Western 
Union  Telegraph  Company ? 

Mr.  Prescott.  It  has  7,264  on  its  pay-rolls,  but  there  are  a  good 
many  others  connected  with  it  indirectly. 

Mr.  Dickey.  Is  there  any  case  where  the  railroad  companies  own  the 
telegraph  poles  and  where  the  Western  Union  Telegraph  Company  does 
not  possess  the  right  of  way? 

Mr.  Prescott.  There  are  a  few  railroad  companies  which  own  their 
own  telegraph  lines  and  over  whose  routes  the  Western  Union  Tele¬ 
graph  Company  does  not  possess  the  right  of  way,  but  on  most  of  the 
railroads  our  company  has  secured  the  right  of  way  by  contract. 

Mr.  Lines.  I  would  like  to  ask  about  what  proportion  of  these  con¬ 
tracts  there  is  where  there  is  any  mention  whatever  made  of  the  right 
of  way  as  a  consideration. 

Mr.  Prescott.  In  all  contracts  the  right  of  way  is  recognized  and 
constitutes  a  material  consideration. 

Mr.  Dickey.  The  railroad  company  has  got  the  right  of  way,  and  the 
telegraph  pole  is  an  incident  of  that  right  of  way.  The  right  of  way 
must  be  in  the  railroad  company  ? 

Mr.  Prescott.  Yes,  the  right  of  way  is  in  the  railroad  company,, 
and  our  company  has  never  constructed  a  telegraph  line  upon  any 
railroad  without  securing  from  it  a  right  of  way,  except  in  the  case  of 
the  Pacific  Railroads,  where  the  right  of  way  was  conveyed  to  the  com¬ 
pany  by  act  of  Congress. 

The  Chairman.  I  suppose  that  the  railroad  companies  have  not  in 
any  case  parted  with  that  right  of  way,  except  temporarily  % 

Mr.  Prescott.  The  right  of  way  is  limited  to  the  duration  of  the 
contracts,  some  of  which  are  perpetual  and  others  for  a  long  term  of 
years.  Virtually  we  consider  the  grant  of  the  right  of  way  as  perpetual. 
There  is  a  marked  difference  between  the  relations  of  the  telegraph  and 
railroad  companies  in  this  country  and  England  in  this  regard.  In 
England,  to  a  considerable  extent,  the  railroad  companies  owned  the 
telegraphs  on  their  roads  and  not  only  operated  them  for  the  perform¬ 
ance  of  their  own  service,  but  sent  and  received  messages  for  the  public 
at  rates  fixed  by  the  railroad  companies. 

In  this. country,  on  the  contrary,  the  Western  Union  Telegraph  Com¬ 
pany  as  a  rule  owns  and  operates  the  telegraphs  on  the  lines  of  the 
various  railroads,  and  not  only  performs  the  public  telegraph  business 
but  also  that  of  the  railroads.  When  the  British  government  purchased 


42 


the  telegraph  lines  in  the  United  Kingdom  they  had  to  purchase  from 
the  railroad  companies  their  telegraph  interests,  and  at  the  date  of  Mr. 
Scudamore’s  last  report,  there  yet  remained  forty-four  railroad  compa¬ 
nies  in  various  parts  of  the  country  with  whom  the  post-office  depart¬ 
ment  had  not  made  arrangements  as  to  the  amount  of  compensation  to 
be  paid  to  them  for  the  purchase  of  their  telegraph  interests. 

Mr.  Dickey.  Sometimes  you  have  your  offices  together  and  some¬ 
times  have  the  same  operator  % 

Mr.  Prescott.  Yes ;  very  generally.  In  many  cases  the  employes 
of  the  railroad  companies  also  act  as  agents  of  the  telegraph  and  thus 
enable  our  company  to  maintain  telegraph  stations  at  places  where  the 
telegraph  business  would  not  pay  the  wages  of  an  operator.  Nearly 
all  railroad  telegraph  operators  receive  and  transmit  public  messages 
over  the  Western  Union  telegraph  lines,  the  railroad  companies  receiv¬ 
ing  a  commission  upon  such  business.  The  result  of  this  is  not  only 
to  enable  the  Western  Union  Company  to  reduce  the  rates,  in  con¬ 
sequence  of  the  saving  in  the  expense  of  operating  the  lines  by  this  co¬ 
operative  arrangement,  but  also  to  approximate  more  nearly  than  they 
otherwise  could  to  a  uniform  tariff  of  charges. 

The  Chairman.  I  wish  to  ask  a  question  touching  the  amount  of  the 
telegraph  business  of  this  country.  I  have  here  the  English  report  for 
the  week  ending  March  23,  1872,  and  for  the  corresponding  week  last 
year.  The  number  of  messages  sent  in  England  for  the  week  ending 
March  23,  1871,  was  212,472;  for  the  corresponding  week  of  1872, 
273,643;  being  an  increase  over  last  year  of  61,171.  If  this  week  is  a 
fair  average  they  are  now  sending  messages  in  England  to  the  number 
of  14,230,000  per  annum,  which  is  an  increase  of  about  750,000  mes¬ 
sages  over  last  year. 

Mr.  Prescott.  No  single  week  can  be  selected  as  a  fair  average  ff?r 
the  year.  A  variety  of  causes  may  increase  the  traffic  of  one  week  over 
another.  In  Mr.  Scudamore’s  report  on  the  reorganization  of  the  tele¬ 
graph  system  of  the  United  Kingdom,  he  states  that  the  total  number  of 
messages  forwarded  in  the  nine  months  ending  December  31,  1870,  was 
7,563,015.  He  also  states  that- the  heaviest  week  in  the  nine  months 
was  the  week  ending  23d  July,  when  the  war  x>anic  raised  the  number 
to  234,194,  and  that  the  lightest  was  the  week  ending  31st  December, 
when  the  Christmas  holidays  brought  the  number  down  by  35,000 
below  the  previous  week.  Undoubtedly  there  has  been  a  large  increase 
in  the  telegraph  traffic  in  England  during  the  past  two  years,  but  it 
must  be  borne  in  mind  that  there  have  been  very  large  expenditures 
and  great  increase  of  facilities.  On  page  84  of  Mr.  Scudamore’s  report 


he  states  that  the — 

Total  number  of  instruments  in  use  on  31st  August,  1870,  was. .  4,153 

Total  number  of  instruments  before  transfer . . . .  1,869 


Additional  number  under  the  post-office .  2,284 


On  page  85  is  a  schedule  of  50.  new  circuits  in  course  of  formation, 
regarding  which  Mr.  Scudamore  says:  “ Large  as  the  system  now  is,  it 
will  be  far  larger  and  afford  far  more  accommodation  when  the  new  cir¬ 
cuits,  now  in  course  of  formation,  are  completed.”  These  circuits  em¬ 
brace  all  the  principal  towns  in  England,  Scotland,  and  Ireland.  In 
Mr.  Scudamore’s  report  to  the  chancellor  of  the  exchequer,  dated  June 
3,  1871,  he  says  : 

The  new  wire  circuits  described  at  page  85  of  ray  report  are  on  the  very  verge  of 
completion,  but  only  some  small  portions  of  them  are  as  yet  earning  money.  When 


43 


they  are  open  throughout,  our  revenue  will  immediately  and  largely  he  increased,  for 
there  is  nothing  more  certain  in  telegraphic  business  than  this,  that  the  trade  increases 
with  the  speed  of  transmission.  I  could  furnish  many  illustrations  of  this,  but  one 
will,  perhaps,  suffice.  For  a  long  time  we  had  no  direct  communication  between  Lon¬ 
don  and  Dundee,  the  messages  being  repeated  at  Edinburgh.  The  complaints  of  delay 
were  great,  and  the  complainants  generally  declared  that  they  did  not  send  half  so  many 
messages  as  they  should  send  if  the  speed  were  greater.  In  February  last  we  contrived 
to  give  London  direct  communication  with  Dundee,  audiu  the  first  week  Die  messages 
were  doubled,  aud  they  have  since  gone  on  increasing.  I  could  multiply  instances 
with  ease. 

Undoubtedly  all  of  tlie  important  additional  circuits,  above  referred 
to,  have  long  since  been  put  in  operation  and  are  the  priucipal  cause  for 
the  great  increase  in  traffic,  for,  as  Mr.  Scudamore  truly  observes,  u  there 
is  nothing  more  certain  in  telegraphic  .business  than  that  the  trade  increases 
with  the  speed!  of  transmission ,”  and  the  speed  of  transmission  depends 
upon  the  facilities  afforded. 

The  Chairman.  Can  you  make  an  approximate  statement  of  the  per¬ 
centage  of  increase  of  telegraphic  business  in  this  country  ? 

Mr.  Prescott.  The  percentage  of  increase  on  the  Western  Union  Tele¬ 
graph  lines  since  1867  has  been  as  follows :  Prom  1867  to  1868, 8.9  per 
cent. ;  from  1868  to  1869, 23.8  per  cent. ;  from  1869  to  3  870, 15.4  per  cent. ; 
and  from  1870  to  1871,  16.2  per  cent.  These  are  for  the  fiscal  years  be¬ 
ginning  July  1.  The  increase  in  the  number  of  messages  sent  over  our 
lines  during  the  past  six  months,  as  compared  with  the  corresponding 
time  last  year,  was  19.7  per  cent. 

The  Chairman.  That  very  large  increase  in  1868-’69  was  probably 
the  result  of  the  consolidation  ? 

Mr.  Prescott.  There  was  no  consolidation  during  this  period,  but  a 
considerable  increase  in  the  facilities. 

Mr.  Hubbard.  Was  that  the  year  that  you  reduced  your  rates? 

Mr.  Prescott.  We  have  reduced  our  rates  every  year  since  1866,  but 
it  was  not  during  this  fiscal  year,  but  the  next,  that  we  made  our  great¬ 
est  reduction,  when  the  uniform  square  rates  and  the  transmission  of 
messages  by  night  at  half  rates  were  introduced.  The  increase  of  the 
business  during  the  year  when  these  great  reductions  were  made  was 
only  15.4  per  cent.,  while  for  the  succeeding  year,  when  there  was  no 
very  material  diminution  in  the  rates,  the  increase  was  16.2  per  cent., 
thus  demonstrating  the  fact  that  the  increase  in  the  number  of  messages 
is  due  more  to  the  increase  of  facilities  than  to  the  reduction  of  rates, 
for  during  the  last  year  there  was  a  far  greater  increase  in  the  means 
for  rapidly  performing  the  service  than  at  any  former  period. 

The  Chairman.  Have  you  anything  corresponding  with  those  weekly 
reports  of  the  English  government,  showing  the  number  of  complaints 
where  mistakes  are  made? 

Mr.  Prescott.  We  may  not  have  anything  exactly  corresponding  to 
it.  We  keep  a  record  of  all  the  complaints  which  are  made  to  our  com¬ 
pany  of  mistakes  or  irregularities  in  the  service. 

The  Chairman.  This  report  shows  these  facts :  They  keep  an  ac¬ 
count  of  mistakes  such  as,  u  from  delay  in  transmission  11  non-deliv¬ 
ery  u  inaccuracies  f  u  overcharge  u  messages  paid  for  and  not 
sent  f  or  “  twice  paid  for,”  and  all  other  inaccuracies. 

Mr.  Prescott.  Our  record  of  complaints  is  accurately  kept. 

Mr.  Dickey.  But  you  have  no  account  of  mistakes  where  there  is 
no  complaint  ?  , 

Mr.  Prescott.  Not  as  a  general  thing,  because  we  have  no  means  of 
knowing  that  a  mistake  has  occurred  unless  some  one  makes  a  com¬ 
plaint.  When  errors  do  occur  we  are  very  glad  to  be  informed  of  them, 
so  as  to  enable  us  to  prevent  a  recurrence. 


44 


Tlie  Chairman.  Here  is  a  statement  of  complaints  for  the  week 


ending  March  23,  1872  : 

Total  number  of  complaints  for  the  whole  kingdom. . . 225 

For  the  corresponding  week  last  year .  .  317 


I  have  been  receiving  these  reports  during  the  summer,  and  it  has 
been  a  very  curious  thing  to  me  to  see  how  slowly  but  steadily  the  com¬ 
plaints  have  been  decreasing. 

Mr.  Prescott.  The  English  government  is  managing  the  telegraph 
with  a  great  deal  of  ability  and  success,  and  is  improving  the  service 
very  rapidly.  Nearly  all  the  skilled  employes  of  the  old  companies  are 
retained  under  the  government,  and  there  is  no  reason  why,  with  unlim¬ 
ited  resources  in  skilled  labor  and  money,  the  system  should  not  be 
equal  to  any  in  the  world. 

The  Chairman.  It  indicates  to  me  that  during  the  past  year  they 
have  very  greatly  bettered  the  postal -telegraph  service,  and  it  seems 
very  remarkable  to  me  that  a  thing  done  by  the  government  should 
have  so  much  efficiency,  on  the  general  principle  that  I  believe  private 
companies,  or  individuals,  do  work  much  better  than  a  government  can. 
It  seems  to  indicate  that  the  government  in  England  is  doing  the  work 
with  remarkable  accuracy. 

Mr.  Prescott.  That  is  true ;  but  yet  those  statements  do  not  afford 
conclusive  proof  that  the  number  of  errors  is  decreasing.  Any  person 
who  suffers  from  a  mistake  made  on  our  lines  can  obtain  redress  from 
us,  or,  if  not  satisfied  with  our  treatment  of  his  demands,  can  seek  re¬ 
dress  through  the  courts,  and  we  are  obliged  to  pay  whatever  damage 
is  awarded.  But  if  a  mistake  is  made  by  the  post-office  telegraph  in 
England  the  postmaster  may  refund  the  shilling  paid  for  sending  the 
telegram,  but  beyond  this  the  complainant  has  no  redress  whatever, 
and  no  man  has  any  redress  under  any  government  telegraph  system. 
Now  I  cannot  say  what  proportion  of  the  English  people  would  prefer 
a  formal  complaint  for  a  shilling,  but  I  am  very  confident  that  there  is 
a  very  small  proportion  of  the  people  who  use  the  telegraph  in  this 
country  who  would  take  that  trouble  for  so  small  a  sum.  While,  there¬ 
fore,  the  number  of  complaints  reported  by  the  post-office  department 
may  approximately  represent  the  number  of  errors  made  by  the  tele¬ 
graph  and  show  the  ratio  of  improvement,  it  cannot  be  regarded  as 
showing  the  maximum  number.  The  complaints  for  errors  and  failures 
to  deliver  messages,  in  which  damages  have  been  claimed  from  our 
company  during  the  past  year,  have  amounted  to  only  five  hundred,  or 
about  ten  per  week. 

Mr.  Palmer.  How  much  in  amount  has  the  Western  Union  Telegraph 
Company  ever  paid  in  the  way  of  grievances  f  Can  you  give  a  general 
estimate  of  the  aggregate  amount  ? 

Mr.  Prescott.  During  the  past  five  years  our  company  has  paid 
$70,747.77,  being  an  average  of  $14,149.55  per  annum. 

Mr.  Dickey.  I  have  brought  several  suits  myself  against  the  West¬ 
ern  Union  Telegraph  Company. 

The  Chairman.  (To  Mr.  Prescott.)  Do  you  think  that  the  Western 
Union  Telegraph  Company  would  be  willing  to  take  Mr.  Hubbard’s 
postal  plan  and  execute  it  themselves? 

Mr.  Prescott.  I  do  not  thinly  the  Western  Union  Telegraph  Company 
would  be  willing  to  pay  Mr.  Hubbard  the  million  dollars  provided  in 
the  bill  for  organizing  his  company  merely  for  the  purpose  of  engaging  in 
a  business  which  they  are  already  successfully  performing;  but  with  a 
few  immaterial  alterations  in  the  bill  I  think  our  company  would  be 


45 


•willing  to  undertake  the  transmission  of  messages  at  the  rates  proposed 
by  him. 

Mr.  Lines  stated  that  the  chancellor  of  the  exchequer  was  very 
well  satisfied  with  the  price  paid  for  the  English  telegraph  lines. 
Now  I  have  here  Mr.  Scudamore’s  report  made  to  the  chancellor  of  the 
exchequer  on  the  12th  of  July,  1871,  in  which  he  states  that  they  had 
already  paid  for  the  British  telegraph  lines  £7,518,955  for  the  plant. 
That  would  amount  to  nearly  $40,000,000  for  about  as  many  miles  of 
wire  and  only  one-third  as  many  miles  of  line  as  the  Western  Union 
Telegraph  Company  alone  possesses,  and  yet  Mr.  Lines  says  he  thinks 
$12,000,000  would  buy  all  the  telegraph  lines  in  America. 

Mr.  Lines.  That  is  admitting  that  the  United  States  Government 
stand  in  the  same  relation  to  the  telegraph  companies.  But  I  propose 
to  show  that  they  do  not.  What  I  read  from  Hansard  was  what  the 
chancellor  of  the  exchequer  stated  before  it  was  ascertained  how  much 
money  would  have  to  be  paid.  It  was  when  he  supposed  that  twenty 
years’  purchase  would  amount  to  £2,200,000. 

Mr.  Prescott.  Has  there  been  any  official  complaint  since  then  that 
the  British  government  paid  too  much  ? 

Mr.  Lines.  I  have  read  a  pretty  strong  opinion  of  that  sort  from  a 
member  of  Parliament. 

Mr.  Prescott.  You  stated  also  that  this  was  the  only  country  where 
the  telegraph  lines  were  not  under  government  control.  Do  you  think 
that  is  a  true  statement'?  Are  not  the  telegraph  lines  in  the  Dominion 
of  Canada,  Newfoundland,  and  in  some  parts  of  Europe  still  under  pri¬ 
vate  control?  Are  not  all  the  principal  submarine  telegraph  lines  in  all 
parts  of  the  world  owned  and  operated  by  private  companies  ?  If  you 
were  to  send  a  message  to-day  from  any  part  of  America  to  China, 
Japan,  or  Australia,  it  wrould  pass  over  the  lines  of  private  telegraph 
companies  throughout  the  entire  route,  with  a  single  exception  of  the 
line  from  Bombay  to  Madras.  There  is  more  private  capital  invested 
in  telegraphs  to-day  throughout  the  world  than  there  is  governmental. 

Mr.  Lines.  I  do  not  know  how  to  answer  that  unless  Mr.  Prescott 
produces  some  statistics. 

Mr.  Prescott.  I  have  the  statistics  here,  and  they  are  all  open  to 
your  inspection. 

Mr.  Dickey.  I  do  not  know  that  we  have  got  the  actual  capital  of 
the  Western  Union  Telegraph  Company.  Will  Mr.  Prescott  please 
state  it  ? 

Mr.  Prescott.  The  capital  is  about  $41,000,000. 

Mr.  Dickey.  We  had  Mr.  Orton’s  statement  that  the  net  profits  of 
the  company  were  about  30  per  cent,  of  the  gross  receipts.  How  much 
are  the  gross  receipts  of  the  company? 

Mr.  Prescott.  The  gross  receipts  of  the  company  for  the  fiscal  year 
ending  June  30,  1867,  were  $6,568,925  ;  for  1868,  $7,004,560 ;  for  1869, 
$7,316,918  j  for  1870,  after  we  had  made  a  great  reduction  in  the  day- 
rates  and  introduced  the  night  system  of  half-rates,  $7,138,737 ;  and 
for  1871,  $7,637,448.  The  net  revenue  for  1867,  after  paying  the  work¬ 
ing  expenses - 

Mr.  Dickey.  It  does  not  include  anything  for  construction? 

Mr.  Prescott.  It  includes  nothing  for  construction,  nor  for  any  other 
purpose  than  the  operation  and  maintenance  of  our  lines.  The  net  re¬ 
ceipts  for  1867  were  $2,624,919  5  1868,  $2,641,710 ;  1869,  $2,748,801  $ 
and  for  1870,  after  the  great  reduction  in  the  rates  and  the 
introduction  of  the  night  half-rate  system,  $2,227,965.  Here  was  a  loss 
in  the  net  revenue  of  over  half  a  million  dollars  in  a  single  year,  while, 


46 


if  the  rates  had  not  been  reduced,  the  natural  increase  of  the  business 
would  have  increased  the  net  revenue  by  at  least  $200,000.  The  net  re¬ 
ceipts  for  1871  were  $2,532,601,  being  a  decrease  from  1869,  before  the 
great  reductions  in  the  tariff,  of  $216,110,  and  a  decrease  from  1866-’67 
of  $92,258. 

Now,  during  this  time  we  nearly  doubled  the  number  of  messages  sent 
over  our  lines,  and,  in  order  to  satisfactorily  handle  this  great  increase 
in  the  traffic,  we  were  obliged  to  add  very  largely  to  our  plant,  as  will 
be  seen  by  a  statement  of  the  number  of  miles  of  wire  annually  owned 
by  the  company.  In  1866  we  had  75,686  miles;  in  1867,  85,291;  in  1868, 
97,591;  in  1869,  101,581;  in  1870,  112,191;  in  1871,  121,151.  Thus,  from 
1866  to  1871,  there  was  an  increase  of  15,165  miles  of  wire,  or  about  60 
per  cent.  We  have  also  during  this  period  expended  about  $2,000,000 
in  the  reconstruction  of  our  lines,  so  as  to  greatly  increase  their  working 
capacity. 

Mr.  Dickey.  Is  there  anything  that  will  show  how  much  of  that  was 
an  extension  of  your  business,  and  how  much  of  it  was  absorption  of 
rival  lines  over  the  same  routes? 

Mr.  Prescott.  The  only  absorptions  by  our  company  during  this 
period  were  the  Caton  lines,  in  Illinois,  and  a  line  between  Washington 
and  New  York,  which  was  sold  at  auction  to  pay  the  debts  incurred  in 
working  it,  and  which  came  under  our  control  last  year. 

Mr.  Clark.  What  line  was  that? 

Mr.  Prescott.  The  Bankers  and  Brokers’.  Those  are  the  only  lines 
of  importance  which  came  into  our  possession  by  lease  or  purchase 
during  that  time. 

Mr.  Hubbard.  And  the  California  lines  ? 

Mr.  Prescott.  The  California  lines  came  in  previously. 

Mr.  Clark.  And  the  lines  of  the  American  and  United  States  com¬ 
panies  ? 

Mr.  Prescott.  They  were  consolidated  with  the  Western  Union  Tel¬ 
egraph  Company  in  1868,  and  are  included  in  the  statement  already 
given  for  that  year.  During  the  past  six  years  we  have  put  up  over 
60,000  miles  of  new  wire,  which  is  a  quarter  more  than  the  increase  in 
our  wires  shown  by  my  recent  statement,  notwithstanding  the  absorp¬ 
tion  of  the  Bankers  and  Brokers’  and  Caton  lines.  Every  year  we  are 
compelled  to  replace  a  considerable  amount  of  ^wire  which  has  become 
worn  out. 

Mr.  Dickey.  That  is  repair  ? 

Mr.  Prescott.  Yes,  that  is  repair,  although  it  is  generally  termed 
reconstruction.  That  reminds  me  that  Mr.  Scudamore  places  this  kind 
of  repair  to  construction  account.  In  his  report,  dated  July  12,  1871, 
he  says : 

Tlie  analysis  of  our  accounts  for  the  fourteen  months  ending  the  31st  March  last  is 
not  sufficiently  advanced  to  enable  us  to  state  positively  the  exact  proportions  in  which 
the  total  sum  expended  shopld  be  distributed  between  capital  and  revenue.  Through¬ 
out  the  fourteen  months  we  have  constantly  had  large  gangs  of  men  engaged,  at  one 
and  the  same  time,  in  putting  in  order  the  property  which  we  have  bought  and  in  con¬ 
structing  fresh  lines,  (the  cost  of  which  two  operations  is  properly  chargeable  to  capi¬ 
tal,)  and  in  ordinary  maintenance  work,  such  as  the  repairs  of  casual  damage,  the 
taking  off  of  faults,  and  other  work  of  the  kind,  the  cost  of  which  is  properly  chargeable 
to  working  expenses.  We  could  not  avoid  this  in  the  first  year  of  our  work;  but  our 
reconstructions  are  now  nearly  complete,  and  when  our  present  scheme  of  construc¬ 
tions,  which  are  also  approaching  completion,  is  finished,  further  constructions  will 
no  doubt  be  provided  for  by  annual  vote. 

Mr.  Scudamore  lias  apparently  yet  to  learn  that  reconstruction,  like 
construction  is  something  which  is  never  finished.  A  telegraph  line  is 


47 


scarcely  built  before  decay  begins  ;  and  its  reconstruction  is  as  necessary 
an  item  to  be  considered  and  provided  for  as  the  ordinary  working  ex¬ 
penses  of  the  wire. 

If  the  Western  Union  Company  should  charge  its  repairs  to  construc¬ 
tion  account,  it  would  apparently  increase  the  net  revenue  over  three- 
quarters  of  a  million  of  dollars  annually. 

The  Chairman.  Do  you  doubt  the  correctness  of  the  report  of  the 
chancellor  of  the  exchequer,  that  the  net  profits  for  the  last  year  were 
£50,000  ? 

Mr.  Prescott.  I  have  not  seen  the  report  you  allude  to. 

The  Chairman.  I  refer  to  the  statement  made  in  a  cable  dispatch, 
given  some  weeks  ago. 

Mr.  Prescott.  I  do  not  question  the  accuracy  of  the  report  of  the 
chancellor  ofi.the  exchequer,  or  of  any  other  British  official ;  but  I  think, 
in  making  up  their  telegraph  accounts,  many  important  items  which 
we  should  charge  to  ordinary  working  expenses  the  British  post-office 
telegraph  carries  to  construction  account,  and  thus  their  net  revenue  is 
made  to  appear  greater  than  the  facts  warrant.  I  have  here  Mr.  Scud¬ 
amore’s  report  to  the  chancellor  of  the  exchequer,  dated  June  3,  1871, 
which  includes  a  statement  made  by  George  Chetwynd,  receiver  and 
accountant  general,  showing  the  amount  of  telegraph  revenue  collected 
from  the  commencement  up  to  March  31,  1871,  and  the  expenditures 
for  the  same  period.  The  total  receipts  are  stated  at  £798,580,  and  tbe 
total  expenditures  as  £1,397,389.  The  expenditures  are  divided  into 
two  classes,  namely,  capital  expenditure  £926,891,  working  expenditure 
£470,495. 

Under  the  head  of  capital  expenditure  are  £346,794  for  poles,  arms, 
wire,  insulators,  instruments,  batteries,  and  tools,  none  of  which  items 
are  to  b^  found  under  the  head  of  working  expenses.  And  yet,  how  could 
a  telegraph  of  the  magnitude  of  the  British  system  be  worked  fourteen 
mouths  without  requiring  a  heavy  necessary  outlay  for  these  articles  ir¬ 
respective  of  construction  ? 

Under  the  head  of  capital  account  £377,449  are  also  placed  for  en¬ 
gineering  salaries  and  traveling  expenses,  alteration  of  buildings,  pre¬ 
liminary  instruction,  bonuses  to  learners,  office-fittings,  examining  ac¬ 
counts  of  telegraph  companies,  law  expenses,  &c.,  none  of  which  items 
appear  under  the  head  of  working  expenses,  although  just  such  ex¬ 
penses  must  continue  to  be  made  every  year  as  long  as  the  telegraph  is 
maintained. 

Now,  I  do  not  doubt  the  correctness  of  these  figures  at  all,  but  I  think 
a  considerable  portion  of  them  would  be  much  more  properly  placed 
under  the  head  of  working  expenses  than  capital  account.  This  matter 
of  the  proper  division  of  the  expenditures,  however,  I  regard  as  of  small 
importance.  There  is  no  reason  why,  at  the  rates  charged,  the  English 
telegraph  should  not  be  self-sustaining  ultimately,  if  it  is  not  now ; 
and  there  is  no  room  for  doubting  the  fact  that  it  has  greatly  improved 
since  it  passed  under  the  control  of  the  government.  The  opening  of 
1,350  new  offices  and  the  erection  of  30,000  or  40,000  miles  of  wire  could 
not  fail  to  vastly  improve  the  capacity  and  value  of  the  system.  The 
plans  adopted  by  Mr.  Scudamore  for  carrying  out  the  work  were  admir¬ 
able,  and  evince  great  judgment  and  ability  on  his  part.  The  work  of 
reorganization  and  extension  was  intrusted  to  the  officers  of  the  com¬ 
panies  which  were  bought  out,  and  the  position  of  engineer-in-chief  of 
the  post-office  telegraphs  was  given  to  Mr.  Culley,  the  former  electrician 
of  the  Electric  and  International  Telegraph  Company.  While  I  see  no 
reason,  therefore,  why  the  British  post-office  telegraph  system  should 


48 


not  equal  any  other  in  the  world,  I  do  not  consider  its  success  as  in  any 
manner  due  to  its  subordination  to  the  post-office  authorities,  but  regard 
it  as  mainly  due  to  the  unification  of  the  system  by  uniting  all  the  lines 
under  one  control,  and  by  the  extension  of  its  lines  so  as  to  afford  prompt 
telegraphic  communication  between  all  parts  of  the  United  Kingdom. 
The  reduction  of  the  tolls  in  Great  Britain  since  the  lines  were  placed 
under  the  control  of  the  government  has  been  no  greater  than  in  this 
country  since  October,  1869. 

The  tariff  between  London  and  many  important  places  where  the 
bulk  of  the  business  was  done  was  a  shilling  before,  while  the  rates 
throughout  the  metropolis  have  been  raised  by  the  government  from  six 
pence  to  a  shilling  per  message.  The  advantage  of  having  a  uniform 
rate  is  indisputable,  and  in  small  compact  countries  can  be  maintained 
without  difficulty,  but  in  a  country  so  extensive  as  the  United  States  it 
would  be  impracticable,  except  at  rates  which  would  be  unsatisfactory 
to  those  who  wished  to  send  over  sflort  distances. 

Mr.  Hale.  You  have  given  your  gross  receipts  and  your  net  receipts ; 
what  were  your  dividends  during  those  years  ? 

Mr.  Prescott.  The  Western  Union  Company  has  not  made  any  divi¬ 
dend  since  January,  1870.  The  dividends,  when  they  were  made,  were 
two  per  cent,  semi  annually.  Occasionally  the  dividend  was  passed. 
The  company  has  never  paid  over  four  per  cent,  since  1866. 

Mr.  Dickey.  I  recollect  when  I  got  four  per  cent,  a  quarter. 

Mr.  Prescott.  Not  from  the  Western  Union  Telegraph  Company,  1 
think.  I  have  been  a  stockholder  in  the  company  for  eight  or  nine 
years,  and  1  never  got  any  such  dividend  as  that. 

Mr.  Dickey.  1  don’t  speak  of  that  being  the  dividend  on  the  capital 
stock,  but  on  the  cash  put  in. 

Mr.  Hale.  What  is  the  stock  selling  at? 

Mr.  Prescott.  It  was  selling  at  76  yesterday. 

Mr.  Hale.  What  was  it  selling  at  two  years  ago? 

Mr.  Prescott.  I  think  it  sold  from  35  to  40. 

The  Chalrman.  How  is  it  that  the  prices  have  doubled  within  two 
years  when  there  has  been  no  dividend  ? 

Mr.  Prescott.  It  is  evident  enough  that  if  we  make  a  profit  of 
$2,500,000  per  annum  and,  instead  of  paying  dividends,  put  the  earnings 
into  new  lines,  the  stock  ought  to  become  more  valuable. 

The  Chairman.  Not  for  the  stockholders. 

Mr.  Prescott.  That  depends  upon  how  long  the  stockholder  keeps 
his  stock. 

The  Chairman.  It  may  be  that  there  will  be  a  pretty  big  dividend  to 
come.  Do  you  know  whether  anything  of  that  sort  is  intended? 

Mr.  Prescott.  It  would  not  surprise  me  it  there  should  be,  although 
I  do  not  pretend  to  know  anything  about  it.  As  for  the  reasons  for  the 
fluctuations  in  the  price  of  the  stock,  you  might  as  well  ask  me  why 
Erie  sold  at  18  two  years  ago  and  65  now. 

The  Chairman.  1  think  that  the  Erie  ring  and  the  late  explosion  ex¬ 
plain  that. 

Mr.  Prescott.  I  bought  Western  Union  Telegraph  stock  at  par 
seven  years  ago  and  hold  the  same  certificates  now.  There  have  been 
no  stock  dividends  since,  and  yet  the  actual  property  value  has  been 
very  greatly  enhanced  by  the  construction  of  new  lines  and  the  recon¬ 
struction  of  the  old.  The  temporary  depression  of  the  stock  two  or 
three  years  ago  was  no  criterion  of  its  value,  as  the  action  of  the  present 

Mr.  Lines.  I  would  like  to  ask  Mr.  Prescott  whether  he  is  perfectly 


49 


satisfied  that  there  will  be  no  redress  under  the  management  of  the 
Post-Office  for  malfeasance  in  any  of  the  telegraph  employes  ? 

Mr.  Prescott.  I  do  not  know  what  sort  of  justice  might  be  dealt  out 
to  the  employes  of  the  Post-Office,  but  I  am  very  sure  that  the  public 
would  have  no  remedy. 

Mr.  Lines.  Cannot  there  be  action  in  court  for  the  malfeasance  of  a 
postmaster,  clerk,  or  operator  ? 

Mr.  Prescott.  Suppose  you  send  a  valuable  letter  through  the  post- 
office  and  it  is  stolen  by  one  of  the  employes  ?  If  the  fact  could  be 
proven  the  employe  would  doubtless  be  punished,  but  that  would  not 
reimburse  you  for  your  loss,  and  you  could  not  get  any  redress  from 
the  Department. 

Mr.  Dickey.  Mr.  Prescott  is  correct  about  that. 

I  do  not  consider  it  necessary  at  this  time  to  criticise  Mr.  Hubbard’s 
argument  in  favor  of  his  bill,  but  I  deem  it  proper  to  say  that  the  greater 
portion  of  his  remarks  relating  to  our  company  are  incorrect,  and  that 
there  is  no  foundation,  in  fact,  for  any  of  the  following  statements,  viz : 

1.  That  the  rates  at  the  West  are  twice  as  high  as  those  at  the  East. 

2.  That  the  rates  are  higher  between  the  principal  cities  now  than 
they  were  six  years  ago. 

3.  Tli at  the  amalgamation  of  the  United  States  and  the  Western 
Union  Companies  raised  the  rates  in  many  parts  of  thecountry,  and  they 
have  nevgr  been  reduced  between  the  large  cities. 

4.  That  the  Western  Union  Company  has  raised  the  rates  so  as  to 
crush  out  more  than  one  newspaper. 

5.  That  the  Western  Union  Company  has  issued  notice  to  exclude 
any  paper  from  receiving  news  which  undertook  to  criticise  it. 

6.  That  within  a  year  this  company  has  cut  off  a  paper  for  criticising 
reports. 

7.  That  commercial  news  is  sent  over  our  lines  to  the  exclusion  of  all 
other  business,  by  priority. 

I  have  already  stated  that  the  rates  have  been  constantly  reduced 
every  year  since  the  consolidation  of  the  United  States  and  American 
lines  with  the  Western  Union,  in  1866.  In  no  instance  was  that  consoli¬ 
dation  followed  by  an  increase  in  the  tolls.  As  our  gross  revenue  for 
1871  shows  an  increase  over  that  of  1869  of  less  than  5  per  cent.,  while 
our  net  revenue  decreased  in  the  same  time  over  8  per  cent.,  how  can 
Mr.  Hubbard’s  statement,  that  we  have  doubled  the  number  of  messages 
transmitted,  be  reconciled  with  his  assertion  that  we  have  only  reduced 
our  rates  from  15  to  20  per  cent.?  Of  course,  if  we  have  doubled  our 
business  and  only  decreased  the  rates  20  per  cent.,  our  gross  revenue 
should  show  an  increase  of  60  per  cent,  instead  of  5. 

A  great  deal  of  importance  has  been  attached  to  the  proposition  to 
unite  the  postal  and  telegraph  systems  of  the  country,  and  European  ex¬ 
perience  is  referred  to  as  evidence  of  the  benefits  to  accrue  from  such  a 
union  ;  but  while  it  is  true  that  the  aerial  telegraphs  in  continental  Eu¬ 
rope  are,  for  the  most  part,  owned  and  controlled  by  the  governments  of 
the  respective  States  through  which  they  run,  the  assertion  that  they 
form  a  part  of  the  public  postal  system  is  erroneous.  England  is  the 
only  country  in  Europe  where  the  telegraph  and  postal  systems  are 
united.  In  North  Germany,  which  comprises  twenty-two  states,  the 
administration  of  the  telegraphs  constitutes  a  distinct  department  under 
the  government  of  the  confederation,  Major  General  De  Chauvin  being 
director  general  of  telegraphs,  assisted  by  ten  directors,  having  their 
headquarters  at  Berlin,  Breslau,  Cologne,  Dresden,  Frankfort,  Halle, 
Hamburg,  Hanover,  Kcenigsberg,  and  Stettin.  The  telegraphs  in  Aus- 
4  T 


50 


tria,  Hungary,  Bavaria,  Wiirtemberg,  Baden,  and  Holland  form  one 
system  under  the  head  of  the  South  German  Telegraph  Union,  and  in 
the  several  States  are  managed  as  distinct  departments  by  their  re¬ 
spective  directors  general.  In  Bussia,  France,  and  Spain,  the  telegraphs 
constitute  a  distinct  department  under  the  minister  of  the  interior;  in 
Belgium,  Italy,  and  Portugal,  under  the  minister  of  public  works;  in 
Denmark,  Norway,  and  Sweden,  under  the  Minister  of  Finance;  and 
in  Switzerland  the  administration  of  the  telegraph  constitutes  a  distinct 
department  under  the  federal  council.  In  fact,  in  all  the  continental 
countries  of  Europe  the  telegraph  constitutes  a  distinct  department, 
and,  although  the  post-office,  railways,  and  customs,  as  well  as  private 
establishments,  supply  the  elements  of  an  auxiliary  staff,  all  the  persons 
employed  in  the  transmission  and  delivery  of  the  telegrams  depend  upon 
the  administration  of  telegraphs  for  their  compensation,  and  in  the 
annual  budgets  appropriations  are  made  for  that  service  distinct  from 
the  post. 

As,  therefore,  none  of  the  telegraph  systems  in  continental  Europe  are 
under  the  control  of  or  are  united  with  the  post-office  departments,  all 
considerations  of  value  or  exj^erience  based  upon  the  theory  of  such  a 
connection  should  be  eliminated  from  any  estimate  which  may  be  made 
in  reference  to  the  proposed  union,  in  whole  or  in  part,  of  the  telegraph 
and  postal  systems  in  the  United  States. 

The  question,  however,  as  to  what  department  of  the  government  the 
telegraph  is  attached  is  of  no  great  importance.  It  is  a  service  in  every 
branch  of  which  skilled  labor  is  required,  and  whether  it  be  under 
the  control  of  the  minister  of  the  interior,  finance,  public  works,  or  the 
postmaster  general,  it  can  only  be  successfully  managed  and  operated 
by  telegraphists  especially  educated  for  this  peculiar  service.  Whether 
the  telegraphs  are  as  well  managed  in  Europe  under  the  various  govern¬ 
ments  as  they  might  be,  or  as  they  j>robably  would  be  in  those  countries 
by  private  companies,  1  do  not  feel  called  upon  to  discuss.  Neither  do 
I  regard  the  extent  of  the  telegraphic  facilities  furnished  in  Europe,  or 
the  price  at  which  messages  are  transmitted,  as  of  any  particular  conse¬ 
quence  in  considering  the  comparative  merits  of  governmental  apd  pri¬ 
vate  control  of  the  telegraph,  since  the  government  may  send  messages 
at  any  tariff  it  chooses  to  establish,  and  furnish  such  facilities  as  it  deems 
best,  totally  irrespective  of  the  important  question  as  regards  private 
companies  as  to  whether  the  revenue  shall  equal  the  cost  of  the  service. 

I  think,  however,  I  may  very  properly  compare  the  telegraphic  facili¬ 
ties  furnished  in  Europe  under  governmental  control  with  those  in  this 
country,  where  the  construction  and  operation  of  the  telegraphs  have 
hitherto  been  left  to  private  enterprise. 

In  Europe  the  telegraph  system  embraces  175,490  miles  of  line,  475,007 
miles  of  wire,  21,146  sets  of  instruments,  and  15,503  offices. 

In  America  the  telegraph  system  embraces  85,583  miles  of  line,  165,875 
miles  of  wire,  8,655  sets  of  instruments,  and  6,755  offices. 

The  ratio  of  telegraphic  facilities  to  population  in  Europe  is  as  fol¬ 


lows  :  » 

Number  of  inhabitants  to  each  mile  of  line .  1,744 

Number  or  inhabitants  to  each  mile  of  wire .  642 

Number  of  inhabitants  to  each  office . 19,687 

Number  of  inhabitants  to  each  message  sent .  91 

The  ratio  of  telegraphic  facilities  to  population  in  America  is  as 
follows  : 

Number  of  inhabitants  to  each  mile  of  line .  486 


51 


* 

Number  of  inhabitants  to  each  mile  of  wire. .  . .  250 

Number  of  inhabitants  to  each  office .  6,  161 

Number  of  inhabitants  to  each  message  sent .  2T%5¥ 

It  will  thus  be  seen  that,  as  regards  the  facilities  furnished  in  propor¬ 
tion  to  population,  America  is  far  in  advance  of  Europe. 

The  tolls  for  the  transmission  of  messages  are  not  the  same  for  any 
two  countries  in  Europe,  nor  are  they  uniform  for  all  classes  of  mes¬ 
sages  in  any  one  country.  Telegraphic  correspondence  in  Europe  is 
divided  into  two  general  classes,  called  internal  and  international  mes¬ 
sages.  The  internal  messages  are  those  which  are  received,  trans¬ 
mitted,  and  delivered  in  the  same  country $  the  international  messages 
are  those  which  are  received  in  one  country  and  transmitted  into 
another.  As  a  general  rule,  a  low  rate  of  charges  is  adopted  for  the 
transmission  of  internal  messages,  while  a  higher  tariff  is  imposed  upon 
international  messages. 

The  telegraphic  tolls  in  continental  Europe  in  1869  averaged  36 J 
cents  for  internal  messages,  and  $1.01  for  international  messages,  which 
is  a  higher  average  charge  than  is  imposed  in  this  country,  although  it 
is  well  known  that  skilled  labor  is  much  more  expensive  here  than  in 
Europe. 

The  Western  Union  Telegraph  Company  has  for  the  past  six  years 
been  successfully  striving,  by  the  improvement  of  its  lines  and  machinery 
and  by  the  employment  of  the  most  skillful  operators,  to  secure  the 
most  prompt  and  satisfactory  telegraph  service  in  the  world,  and  I  be¬ 
lieve  the  results  will  show  upon  investigation  that  it  has  fully  succeeded. 

The  claim  that  the  Western  Union  Telegraph  Company  is  now,  or 
may  hereafter  become,  a  dangerous  monopoly  is  entitled  to  no  consider¬ 
ation  whatever,  since,  in  the  first  place,  the  telegraph  business  is  every¬ 
where  in  this  country  open  to  free  competition,  no  one  company  having 
any  advantage  over  another,  except  what  it  legitimately  acquires  by 
the  greater  skill  with  which  it  performs  the  service ;  and,  in  the  second 
place,  the  act  of  1866,  which  constitutes  a  compact  between  the  Govern¬ 
ment  and  the  Western  Union  Telegraph  Company,  provides  that  the 
United  States  may  at  any  time,  after  the  expiration  of  five  years  from 
the  date  of  the  passsage  of  the  act,  purchase  all  the  telegraph  lines, 
property,  and  effects  of  the  company  at  an  appraised  value,  to  be  ascer¬ 
tained  by  five  competent*  disinterested  persons,  two  of  whom  shall  be 
appointed  by  the  Postmaster  General  of  the  United  States,  two  by  the 
company,  and  one  by  the  four  so  previously  selected. 

In  conclusion,  permit  me  to  say  that  as  the  success  of  Mr.  Hubbard’s 
scheme  would  inevitably  depreciate  the  value  of  the  property  of  this 
company,  which  the  Government  can  at  any  time  take  at  an  appraisal, 
not  of  its  cost,  but  of  its  value,  I  submit  that  Congress  cannot  consist¬ 
ently  and  in  good  faith  confer  such  a  franchise  upon  Mr.  Hubbard  with¬ 
out  first  releasing  this  company  from  the  obligations  of  the  above  act, 
and  providing  a  just  measure  of  compensation  for  the  depreciation  of 
its  property  which  would  result  from  the  granting  of  such  extraordinary 
privileges  to  a  competitor.  - 


52 


3  0112  062005407 


Electrician’s  Office, 

Western  Union  Telegraph  Company, 

New  York ,  April  26,  1872. 

Dear  Sir:  I  have  just  received  your  favor  of  the  25th,  together  with! 
the  balance  of  proof  of  the  first  three  days’  proceedings,  which  I  shall 
revise  at  once  and  promptly  return  to  you.  I  will  very  cheerfully  make 
any  suggestions,  if  any  occur  to  me,  which  can  improve  the  making  up 
of  the  paper. 

I  shall  esteem  it  an  especial  favor  if  you  will  forward  to  me,  as  early 
as  possible.,  a  proof  of  the  proceedings  of  last  Tuesday. 

Since  my  return  to  New  York,  one  question  asked  by  the  chairman 
has  recurred  to  me  which  1  may  have  misconceived.  The  purport  of 
the  question,  as  I  recollect  it,  was  whether  our  company  would  accept 
the  provisions  of  the  Hubbard  bill ;  that  is  to  say,  whether  our  company 
would  dispose  of  its  property  to  Mr.  Hubbard,  in  case  he  should  be  in¬ 
corporated  under  his  proposed  postal-telegraiih  act;  to  which  I  an¬ 
swered  “No.” 

Upon  reflection  I  have  thought  it  possible  that  I  misunderstood  the 
question  and  that  the  chairman  might  have  asked  whether  our  com¬ 
pany  would  accept  of  an  act  of  incorporation  such  as  Mr.  Hubbard 
desires.  This,  of  course,  would  be  quite  another  thing,  and  I  would 
esteem  it  a  favor  if  you  would  ask  Mr.  Garfield  which  of  the  two  ideas 
was  presented  in  his  question. 

Yours,  very  truly, 

GEO.  B.  PRESCOTT, 

Electrician. 

Robert  J.  Stevens,  Esq., 

Cleric  Committee  on  Appropriations , 

Washington ,  D.  C. 


Committee  on  Appropriations,  House  of  Representatives, 

Washington ,  D.  O.,  April  28,  1872. 

Dear  Sir  :  Your  favor  of  26th  duly  received.  To  your  question  as 
to  the  possibility  of  your  having  misunderstood  his  interrogatories,  the 
chairman  replies,  after  perusal  of  your  letter,  that  according  to  his 
recollection  he  had  asked  if  the  company  would  accept  of  either  of  the 
propositions  named  in  your  letter,  and  if  either,  which ;  the  proposi¬ 
tions  being,  “Whether  our  company  would  dispose  of  its  property  to 
Mr.  Hubbard  in  case  he  should  be  incorporated  under  his  proposed 
postal-telegraph  act or,  “  Whether  our  company  would  accept  of  an 
act  of  incorporation  such  as  Mr.  Hubbard  desires.” 

I  will  forward  to  you,  at  the  earliest  moment,  the  proof  you  desire. 
It  is  not  yet  ordered  to  be  printed,  nor  is  the  manuscript  in,  except  that  of 
Mr.  Lines,  which,  by  the  way,  is  the  greater  part  of  the  proof  already  sent. 
I  commend  to  your  especial  attention  the  appendix,  but  it  will  have  left 
your  hands  before  this  reaches  you,  as,  upon  reflection,  I  remember 
that  I  am  informed  by  Mr.  Orton’s  telegram  of  yesterday. 

Truly  yours, 

ROBT.  J.  STEVENS, 

Cleric  Committee  on  Appropriations. 

Geo.  B.  Prescott,  Esq. 

Note. — By  the  Hubbard  bill  the  writers  mean  the  postal-telegraph 
bill  introduced  into  the  House  by  Mr.  Palmer,  of  Iowa. 


